$59.23
24h
+7.19%
25 Oct, 22:06
Bearish on neocloud debt exposure and lack of bottom visibility
Bearish+9.21%
AI Summary
The author advises against buying the dip in neocloud stocks due to tight debt markets and expects significant industry consolidation, specifically warning against bottom-fishing NBIS and CRWV.
Over the past few weeks, the debt market has almost completely cut off funding channels. Any company without substantial revenue independent of AI data centers cannot secure financing.
SpaceX secured $40 billion in debt for GPUs, but we are an investment-grade company with Starlink and launch revenues.
This means over 200 new cloud providers will face a death by a thousand cuts and consolidation.
Some will survive, but not many.
I have been emphasizing recently: it is not advisable to bottom-fish neoclouds like NBIS or CRWV right now, as you simply cannot see where the bottom is.