In the AI boom, fast-growing, new AI-focused cloud companies known as neocloud firms have become mired in controversy over sustainability. With concerns about overinvestment in AI infrastructure, they are even being pushed as a source of an AI bubble.

As market sentiment turns cold, moves by neocloud firms that have shifted into an aggressive stance also appear to be repeatedly hitting roadblocks.

Neocloud firm Firmus abruptly withdrew its planned initial public offering (IPO). British neocloud firm Nscale’s planned U.S. IPO became uncertain after Microsoft withdrew a data centre lease contract.

Already-listed neocloud firms such as CoreWeave are also suffering as their shares plunge. CoreWeave is being criticised for expanding through large-scale debt, while Firmus and Nscale are being criticised for pursuing listings without notable results.

A recent New York Times report said doubts are growing over whether CoreWeave, a leading neocloud company, can borrow more and how much of what it has borrowed it can repay as investor confidence wavers.

CoreWeave operates 51 data centres and has debt of $72 billion.

As investors priced in a more than 60 percent chance of CoreWeave defaulting, bond yields rose above 15 percent, entering junk bond territory. In the process, CoreWeave shares fell 24 percent last week and dropped 12 percent in a single day on Oct. 16 local time. The New York Times said cracks are emerging in an AI boom fueled by borrowed money.

The New York Times also said CoreWeave’s business model is often compared with WeWork, the shared-office company that once flourished but later filed for bankruptcy protection.

CoreWeave’s business model involves signing contracts of 15 years or more with data centre owners, buying AI chips and then subleasing them to customers such as Meta, Microsoft and OpenAI. The New York Times said many investors are worried about whether big tech companies will keep renting space and whether facilities will become outdated by the time contracts expire.

The company appears to be responding actively to scepticism.

Bloomberg News reported that CoreWeave CEO Michael Intrator (마이클 인트레이터) said in a memo to employees that smaller rivals such as Firmus, Lambda and Nscale, which are trying to raise large sums without execution ability, revenue or scale, have heightened market anxiety.

Nvidia, which has backed CoreWeave, has also moved to contain the situation. Nvidia CEO Jensen Huang (젠슨 황) said at an event in Stockholm, "There is no need to provide additional credit support to CoreWeave." The Information reported that Nvidia agreed to lease the GPUs directly if CoreWeave cannot rent them out to other customers, and that the amount was worth $6.3 billion as of a September 2025 filing.

Even so, anxiety is not subsiding and instead is spreading to large AI cloud companies such as Oracle. Selling pressure in Oracle bonds is also intense, and the sense of unease around SoftBank, which made a large bet on OpenAI, is deepening.

For SoftBank, the premium for a type of insurance taken out in case it cannot repay debt has risen sharply, meaning the market sees a higher possibility of SoftBank default. The New York Times, citing investment bank Barclays, reported that the additional yield investors demand for risky AI bonds, or the spread, has risen more than 50 percent over the past six months.

Some forecasts that large-scale restructuring in the neocloud sector will be unavoidable are also gaining traction amid overheated competition.

The Information, citing two executives at data centre and neocloud companies, said it expects that while there are hundreds of companies that have entered or are preparing to enter the neocloud market now, only 7 to 10 will survive in a few years.

Gartner expected 80 percent of independent neocloud companies to cease standalone operations by 2030. U.S. securities firm Bernstein estimated that only 35 percent of announced data centre capacity in North America will actually be built.

Whether the recent crisis facing the neocloud sector will remain a problem for only a few companies or spread across the broader AI landscape is a huge variable.

The New York Times said the fallout could spread across the entire financial sector if problems grow, as most major mutual funds, insurers and private equity funds have bought AI company bonds.

There is another view. John Lloyd (존 로이드), head of global multi-sector and corporate credit at global asset manager Janus Henderson, said the value of existing AI infrastructure could instead rise if funding for building data centres slows.