Neocloud stocks slump, credit risks rise as Solidigm pulls IPO

Neocloud stocks fell sharply this week, credit default swap spreads on AI infrastructure companies jumped, and SK Hynix's Solidigm unit canceled its IPO, signaling strain in the AI build-out trade. The Nasdaq ended the week down 0.7%, with Alphabet shares sinking 6% ahead of its earnings report. CoreWeave, Nebius, and IREN each fell over 30% in October, with CoreWeave's CDS spreads widening past 11%, a distress level, and its 2031 and 2032 note yields topping 15%. Meta reported negative free cash flow of over $2 billion in the third quarter while raising its full-year capex floor to $135 billion. Gartner predicts 80% of neocloud companies will cease operations or be absorbed by 2030, though Nvidia CEO Jensen Huang remains bullish, saying demand is "off the charts." Oracle's stock has lost over one-third of its value this year, and it faces a potential credit rating downgrade.