Neocloud stocks fall after Musk predicts over 200 firms will collapse

Shares of neocloud companies fell Monday after Elon Musk predicted over 200 firms in the sector could collapse, with Nebius, CoreWeave, and Iren dropping more than 4% in early trading before paring losses to around 2%. Musk said on X that debt markets have "almost entirely shut off access to money" for companies lacking substantial revenue independent of AI data centers, warning of "guppy-level death and consolidation" among neoclouds. His comments followed a post by investor Chamath Palihapitiya forecasting stranded compute and a turbulent 2027. The sector has faced a month-long selloff, with CoreWeave and Nebius down over 30% and Iren down 40%, amid concerns over heavy debt used to fund Nvidia chip purchases. Nvidia CEO Jensen Huang defended demand as "off the charts," while neocloud executives insisted customer demand remains strong.