Neocloud shares fall after Musk predicts sector consolidation

Shares of neocloud companies fell on Monday after SpaceX CEO Elon Musk predicted consolidation and failures in the sector, intensifying concerns about the gap between AI infrastructure spending and revenue. CoreWeave dropped 1.6%, Nebius Group fell 4%, and IREN lost 1.5%. In a Sunday social media post, Musk said over 200 neoclouds face "guppy-level death and consolidation," adding SpaceX would not buy any, calling it "pointless." Thomas Hayes of Great Hill Capital agreed, noting high capital costs make returns unattractive. CoreWeave defended its financing opportunities, citing differentiated technology. Gartner earlier flagged CoreWeave as most exposed among 100 neoclouds, predicting 80% could cease independent operations by 2032. Brokerages expect AI spending to exceed $1 trillion next year, while bonds of Nebius and CoreWeave hit record lows. CoreWeave, Nebius, Applied Digital, and TeraWulf reported quarterly losses, with IREN unprofitable for three quarters.