Elon Musk says that lenders have almost entirely stopped funding companies that earn their money only from AI data centers. He predicted most of the 200-plus AI cloud firms will fold or be bought. <\/p>\n
The warning lands as CoreWeave (CRWV), the largest listed AI cloud firm, pays record rates on its debt. Musk’s own SpaceX, meanwhile, says it just closed $40 billion of borrowing. <\/p>\n
Can CoreWeave Survive Its Debt Bill? <\/p>\n
These firms, known as neoclouds, buy Nvidia chips and rent the computing power to AI developers. Most borrow heavily to do it. <\/p>\n
Musk did not name CoreWeave this weekend. However, on October 14 investor Chamath Palihapitiya shared a chart of a CoreWeave bond yield passing 15%, and Musk replied “Yikes.” <\/p>\n
CoreWeave is the sector’s bellwether, with a reported $50 billion in obligations. When its stock fell more than 15% that day, Oracle, Dell, and Hut 8 also dropped sharply. <\/p>\n
The yield on its $2.75 billion bond due 2031 has since hit a record 15.76%. A higher yield means lenders demand more to hold the debt. <\/p>\n
The shares are about 70% below their peak. Fidelity’s Jurrien Timmer has flagged debt as the AI bubble risk. <\/p>\n
Chief Executive Mike Intrator told staff in a memo that its backlog covers its borrowing. <\/p>\n
“We are confident in our backlog which more than supports all of our debt obligations.” <\/p>\n
Follow us on X to get the latest news as it happens <\/p>\n
Why Musk Says SpaceX Can Borrow When Others Cannot <\/p>\n
Musk credited SpaceX’s investment-grade rating, a mark of low default risk, and its Starlink and rocket-launch income. He was replying to Palihapitiya, who sells powered land to data center builders and expects 2027 to clear out bad bets. <\/p>\n
Earlier reports put the deal at about $10 billion in bank loans and $30 billion in bonds. SpaceX has not published the terms. <\/p>\n
On its October 20 earnings call, SpaceX guided fourth-quarter capital spending to $35 billion to $40 billion. Its AI unit earned $7.6 billion last quarter, more than its connectivity business. <\/p>\n
For shareholders and bondholders of AI-only cloud firms, Musk’s forecast is clear, that some will make it through, he wrote, “but not many.” <\/p>\n
Read the Original story Elon Musk Says 200+ AI Cloud Firms Face Wipeout: Will CoreWeave Survive?<\/a> by Lockridge Okoth at beincrypto.com<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"Elon Musk says that lenders have almost entirely stopped funding companies that earn their money only from AI…\n","protected":false},"author":2,"featured_media":641544,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[2169,365,363,364,138,553,219,246,5932,329,37332,5933,5483,16400,7454,111,139,69,244,8499,13081,294,781,5934,5935,643,37333,7496,145,37334],"class_list":["post-641543","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-401k","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-investing","tag-investment-tools","tag-investor","tag-market-news","tag-mortgage","tag-mutual-funds","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-technology","tag-track-portfolio"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/641543","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=641543"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/641543\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/641544"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=641543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=641543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=641543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}