Neocloud shares rebounded from a 5% to 6% morning slide on Monday, with TeraWulf rising 9.9%, Iren climbing 5.9% and CoreWeave gaining 5% after Elon Musk warned that more than 200 AI cloud operators face “guppy-level death and consolidation.” Investor Dan Niles said the intraday reversal in CoreWeave, Nebius and Iren following an “unambiguously negative” catalyst could mark a short term bottom in the AI selloff after a 19% decline in the SOX index from Oct 6 to Oct 22, though he remains bearish on neoclouds over the long term.
Musk said on Sunday that debt markets have “almost entirely shut off access to money” for companies lacking substantial revenue outside AI data centers and predicted “a lot of stranded compute in partially complete data centers.” By contrast, he confirmed SpaceX closed $40B in callable debt for GPU deliveries in the first half of 2027, supported by its investment grade credit rating and revenue from Starlink and rocket launches. In response to Musk’s warning, TeraWulf’s CEO said, “What others call stranded assets, we may call a development pipeline.”