After a turbulent month at NeoClouds, during which its stock price plummeted by half, investors are eager to understand how the industry leader plans to navigate tighter credit markets and an unfavorable political environment.
CoreWeave is expected to announce its quarterly earnings on Tuesday, while Nebius will report its results on Thursday. Both companies rely on debt to finance their purchases of cutting-edge AI systems, but they are now facing a group of skeptical lenders as Wall Street’s enthusiasm for AI deals cools.
Last Thursday, NeoClouds had an especially bad day, with its stock plunging and dragging Nasdaq to its worst single-day performance in 19 months. Leading chipmakers such as NVIDIA, AMD, and Micron also tumbled amid concerns that growing anti-AI sentiment could further complicate expansion plans.
NVIDIA is a major investor in several neoclouds, including CoreWeave and Nebius. The company now faces new turmoil: CEO Jensen Huang admitted on Sunday that he had an extramarital affair with a business executive whom U.S. intelligence agencies identified as a Chinese spy. This revelation could add further volatility to an already tense market.
The Democratic Party won gubernatorial elections last week in Georgia, Iowa, Nevada, Ohio, and Texas; voters rejected data center projects in all but one of the 41 related ballot measures nationwide.
CoreWeave CEO Mike Intrator posted on LinkedIn to ease investor concerns.
Intrator wrote: “We do not currently expect changes in the political landscape to have any impact on CoreWeave’s existing customer commitments or related order backlog.”
But the market has not eased. The yield on CoreWeave’s bonds maturing in 2031 has risen above 16%. Its five-year credit default swap spread—the cost of default insurance—has surged above 1,240 basis points, a 50% increase from last month.
Anastasia Amoroso, Chief Investment Strategist at Partners Group, said on CNBC’s “Closing Bell” on Friday: “I completely agree—neoclouds will be hit the hardest.” She noted that, unlike hyperscale cloud providers such as Amazon and Microsoft, leading neoclouds are not profitable and are heavily reliant on a small number of customers.
Smaller listed neocloud company IREN stated in its earnings report released late Thursday that approximately 48% of its backlog is related to Microsoft. However, the company provided some market reassurance after disclosing that its AI cloud revenue more than doubled compared to the prior period. IREN’s stock rose 20% on Friday, recovering from Thursday’s decline.
IREN Co-CEO Daniel Roberts told CNBC there is a "disconnect" between market performance and conditions on the customer side, but he also acknowledged the challenges posed by financial markets.
Roberts said on the earnings call: "Capital markets have become more discerning over the past few weeks, and the question has undoubtedly shifted from how large the contract is to whether it can be delivered, financed, and operated profitably." He noted that the company currently has $10 billion in debt.
How to bridge this funding gap
As of the end of June, CoreWeave held $5.5 billion in cash and $35 billion in debt. According to its latest financial report, the company owes $1.3 billion on a financing instrument maturing in March 2028 with an interest rate of 15%, and has a $3.2 billion obligation on a financing instrument maturing in August 2030 with an interest rate of 11%.
Morningstar analyst Luke Yang tracking CoreWeave said that CoreWeave is unlikely to go bankrupt in the short term and has the funds to fulfill existing contracts, but future growth over the next five years will require additional capital.
Yang said, "If they want to raise equity, the stock price is against them because it has dropped significantly. So I also want to see how management will address this funding gap."
Yang also mentioned that he is monitoring the broader neocloud market.
UK-based Nscale filed its IPO documents in September but has not released an updated prospectus since. Yang said, "I wouldn't say now is a good time for them to go public."
SB Energy submitted its listing application in early September, in a similar situation; the Australian company Firmus canceled its IPO plan last month.
In an internal memo seen by CNBC in October, Intrator told employees that this uncertainty has not helped CoreWeave's situation.
He wrote: "But these companies are trying to raise massive capital without the execution capability, revenue scale, business size, or software solutions that CoreWeave provides to its customers."
Investors are still on the sidelines. Paul Meeks, Head of Technology Research at Freedom Capital Markets, said on CNBC’s Power Lunch on Thursday that this narrative is “just too negative.”
He said, "Unfortunately, this creates a self-fulfilling prophecy and a vicious cycle: if creditors worry that CoreWeave cannot repay its debts, they will inevitably need to continue borrowing in the future to finance its AI infrastructure at extremely high interest rates."
CoreWeave generated $5 billion in revenue in 2025. Meeks expects this figure to rise to $42 billion by 2028, with an EBITDA margin approaching 70% that year.
If they can follow that path and the community feels confident about it, people will also be more willing to accept these debts and CoreWeave’s financial ability to repay them.
According to LSEG data, analysts expect CoreWeave’s revenue for its most recent quarter to increase approximately 160% year-over-year to $3.55 billion. Nebius is projected to achieve sixfold growth, reaching approximately $908 million.
Meeks said he expects these two earnings reports to bring "some relief" to the market.
CoreWeave declined to comment. Nebius did not respond to requests for comment.
For Meeks, the key is to get the capital markets to once again support Neoclouds’ growth story and believe that profits are on the horizon.
He said, "You can have a healthy bank, but if bank runs occur in general, they could still run into trouble. So I wouldn't be foolish enough to underestimate credit risk."
Watch: Amoroso of Partners Group: The market is questioning whether data center transactions will continue