Tech

Neocloud Stocks Slide After Musk Predicts 'Guppy-Level Death' and Says SpaceX Closed $40 Billion GPU Debt

CoreWeave, Nebius and Iren fell premarket after Musk said 200-plus neoclouds face consolidation; Bloomberg reported pricing talks on SpaceX's $40 billion chip debt were ongoing.

Oct 26, 2026 - 07:22

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Shares of CoreWeave, Nebius and Iren fell in premarket trading on Monday, October 26, 2026, after SpaceX Chief Executive Elon Musk wrote that more than 200 so-called neoclouds, companies that rent out high-end computing power for artificial intelligence, face "guppy-level death and consolidation." All three stocks dropped more than 4% early in the premarket session before paring losses to between 2% and 3%, CNBC reported.

What Musk wrote

In a post on X on Sunday, Musk wrote that "SpaceX closed $40B of debt for GPUs," referring to Nvidia's graphics processing units, and argued that lenders were treating companies like his differently from AI-only operators. "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," he wrote. "That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many."

Musk was responding to venture capitalist Chamath Palihapitiya, who had described neoclouds as "disorganized and poorly capitalized," according to Business Insider. Palihapitiya wrote that there would be more "partially stranded compute" in 2027 than currently forecast and that "2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets," CNBC reported. Asked by another X user whether he was trying to push down neocloud share prices to buy them cheaply, Musk replied: "SpaceX is not buying any neoclouds. Pointless."

SpaceX, which sells computing capacity from its own data centers, competes directly with neoclouds, CNBC noted.

The $40 billion SpaceX financing

It was not immediately clear what Musk meant by the deal being "closed," Bloomberg reported. As of late Sunday in New York, pricing talks were still ongoing and the debt had not priced, people familiar with the discussions told Bloomberg, according to a version of the report published by The Edge Singapore. The parties were working to finalize the package in the coming days, those people said.

The debt is being structured as private bonds issued by an off-balance-sheet entity. Bankers led by Goldman Sachs had been discussing the structure with investors led by Apollo Global Management, with Apollo-backed Atlas SP slated to manage the entity, and Pacific Investment Management Co. had also considered investing, Bloomberg reported. The debt was expected to be sold as private placements under Rule 144A. In a follow-up post, Musk said the financing consisted primarily of callable debt and was expected to arrive in the first and second quarters of 2027, according to CNBC's markets live blog.

SpaceX, which is rated investment grade by the three largest credit rating firms, has not been immune to the pressure. Credit-default swaps tied to the company rose to a record 266 basis points at Friday's close, a level more typical of a junk-rated borrower, Bloomberg reported. The report said SpaceX's AI unit turned a profit for the first time in the third quarter, increasingly selling computing power from its Memphis data centers to outside AI labs and hyperscalers.

A month of losses for neocloud shares

CoreWeave and Nebius have each fallen more than 30% over the past month, and Iren has dropped 40%, according to CNBC. The selloff began earlier in October after the spread on CoreWeave's five-year credit default swaps reached levels generally viewed as signs of distress, and the yields on its bonds climbed, the network reported. In overnight trading late Sunday, CoreWeave and Nebius each fell 2.3% and Iren 2%, Stocktwits reported; over the previous week, CoreWeave lost 11.6%, its third straight weekly decline, while Iren fell 7.7% and Nebius 4%.

Business Insider cited a Bernstein Research report projecting that only about 35% of planned U.S. data center capacity will be built, with established hyperscalers such as Amazon, Google, Meta and Microsoft likely to complete their projects.

Nvidia and Nebius push back

Nvidia, an investor in several neoclouds, has defended the sector. Chief Executive Jensen Huang told CNBC last week at the company's GTC event in Berlin that demand for neoclouds is "off the charts." "What is missing in the middle is the working capital to fuel that growth," he said, adding: "The demand of the capital is much greater than the availability of the capital. That's going to get solved."

Marc Boroditsky, chief revenue officer at Nebius, told CNBC that "we're not carrying the kind of debt that they are," referring to CoreWeave, and said that if Nebius brought its 2027 capacity online, it would sell out.