Executives at AI infrastructure companies Nebius and Crusoe told CNBC on Wednesday that demand for computing power is driving prices higher, even as investors grow wary of the heavy debt financing underpinning the neocloud sector. CoreWeave, a leading player, has seen its credit default swaps widen and bond yields climb, with its stock falling sharply over the past month alongside peers Nebius and Iren. Nebius chief revenue officer Marc Boroditsky said the company is 'not carrying the kind of debt' that CoreWeave is, adding that an auction for capacity on Tuesday showed continued price rises. Crusoe CEO Chase Lochmiller said even older Nvidia chips command higher rental prices today than when they were first deployed, suggesting the economics of the model may be stronger than feared.
At a time of increasing investor scrutiny, two of the largest neocloud companies are pushing back against concerns that their business model is unsustainable.
Nebius chief revenue officer Marc Boroditsky said on Wednesday that AI computing prices are rising more than expected and that the company's long-term demand outlook is positive. 'We're seeing continued upward mobility in terms of the kind of price per megawatt,' he told CNBC, following an auction for computing capacity the day before.
Boroditsky distanced Nebius from rival CoreWeave, which has seen its five-year credit default swaps reach levels typically considered signs of distress, along with rising bond yields. 'We're not carrying the kind of debt that they are,' he said. Boroditsky also expressed confidence that if Nebius brings its 2027 capacity online, it will sell out, and predicted a similar dynamic for 2028 as companies race to secure computing access.
Crusoe CEO Chase Lochmiller was similarly bullish. 'We're seeing higher pricing today for A100s than we saw in 2020 or 2021. We're seeing higher pricing for H100s than what we saw when they were first deployed in 2023,' he told CNBC. Lochmiller argued that advances in model capability are creating so much value that demand keeps rising, which strengthens the case for continued investment in AI cloud infrastructure.
SpaceX also provided a tailwind for the sector, reporting that revenue at its AI business jumped ninefold to $7.56 billion. SpaceX CFO Bret Johnsen said pricing is 'currently tracking slightly above the high end of the $30 to $50 per watt range,' underscoring the pricing power that neoclouds aim to capture. Nebius shares rose on Wednesday after the SpaceX news, reversing some recent losses.
The conflicting signals -- rising prices and strong demand on one hand, debt concerns and falling stock prices on the other -- leave the neocloud model under a cloud of uncertainty even as its founders insist the fundamentals are sound.
Analysis
Why This Matter
- The neocloud sector has become a critical supplier of AI computing power, and any disruption could affect the pace of AI deployment across industries.
- Heavy debt financing means rising interest rates or a demand slowdown could trigger financial trouble, potentially affecting customers and investors.
- The debate over GPU depreciation timelines will determine whether these companies can generate returns before their hardware becomes obsolete.
Background
Neocloud companies are a new category of infrastructure provider that buys thousands of Nvidia graphics processing units, builds data centres and rents the computing capacity to AI developers. The model relies on rapid construction and high utilization to service large debts. CoreWeave is the largest and most visible player, but others including Nebius, Crusoe, Iren and Applied Digital have all attracted investment. Recent investor unease was sparked by CoreWeave's credit default swap widening and bond yield increases, which raised questions about the sector's ability to manage its debt load.
Key Perspectives
Neocloud executives (Nebius, Crusoe): The executives argue that demand is so strong that pricing continues to rise, including for older GPU generations, and that their companies are not carrying the same level of debt as CoreWeave. They point to sell-out expectations and growing customer revenues as validation.
Skeptical investors: The market is punishing neocloud stocks heavily, and CoreWeave's credit default swaps are a worrying signal of distress. Investors question how quickly Nvidia's GPUs lose economic value as newer chips arrive and whether the industry can service its debt over the long term.
Market analysts: Some analysts expect the sector to consolidate around a handful of large operators that can secure the cheapest debt and fastest deployment. The ability to raise prices even for older chips is a positive sign, but the overall debt burden remains the key risk.
What to Watch
- CoreWeave's bond yields and credit default swap spreads for further signs of deepening distress or stabilisation.
- Nebius and Crusoe's next capacity auctions and whether price per megawatt continues to climb.
- Any guidance or updated depreciation schedules from Nvidia on GPU economic lifecycles.
- The pricing and availability of Nvidia's next-generation chips, which could reset the market.