Data center stocks are being squeezed on Tuesday following a lackluster initial public offering overnight from a South Korean cloud company that has been compared to U.S. neocloud CoreWeave.<\/p>\n
Shares of Elice dropped 30%<\/a> during their market debut overnight, as investors grow increasingly wary of artificial intelligence-dedicated computing power providers amid concerns about overcapacity.<\/p>\n The bearish sentiment spilled into U.S. tech equities before some names clambered back into the green. CoreWeave<\/a> shares are up 1.6% after dropping 4% just after market open Tuesday; Nebius<\/a> shed about 1% while Iren<\/a> was down about 4% in late morning trading.<\/p>\n HSBC said in a Monday note that the troubles for the heavily levered CoreWeave are not going away.<\/p>\n “Debt market woes and moderating LLM revenues are exacerbating structural concerns for neoclouds<\/a>,” HSBC analyst Abhishek Shukla wrote. Shukla has a reduce rating on CoreWeave with a price target of $39, implying 36.5% downside.<\/p>\n Elice’s IPO was small, having raised just $150 million, according to Reuters<\/a>. Its market cap also equates to roughly $1.3 billion. The company <\/a>provides a range of AI-related services, including cloud computing equipment, training libraries and application interfaces for businesses.<\/p>\n Despite its size, investors are likely looking at it as a a signal of investor sentiment toward the AI build-out.<\/p>\n Trouble for neoclouds, which some investors see as the weakest link in the emerging AI value chain, started earlier this month with less-than-stellar revenues reported by the private AI algorithm companies and pressure from higher interest rates.<\/p>\n