Shares of major neocloud stocks fell on Monday after Elon Musk said that more than 200 companies in the sector could collapse.
Nebius, CoreWeave and Iren all dropped more than 4% in early premarket trading, adding pressure to a sector already facing investor concerns about debt-fueled expansion and whether the large AI infrastructure buildout will generate returns. However, these stocks have since pared some of the losses and are now trading between 2% and 3% lower.
"As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers," Musk, CEO of SpaceX and Tesla, said on a post on X on Sunday.
"That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many," he added.
Musk's SpaceX operates its own data centers through which it sells computing capacity. SpaceX is a direct competitor to the neoclouds which also rent compute.