A once-obscure corner of the AI ecosystem finds itself in the spotlight – and investors don't all like what they see.

Names like CoreWeave and Nebius are familiar to the tech set in San Francisco and Silicon Valley.

These data centre companies, known as neocloud firms, run large warehouses packed with expensive computers, which they lease to major AI developers like Anthropic, OpenAI and Meta.

They're now the subject of one of Silicon Valley's most heated debates.

Many question whether neocloud firms are financially sound and what their recent stumbles tell us about the state of the AI economy.

Analysts at Gartner predict by 2030, 80% of neocloud firms will "cease independent operations", while Forrester's experts expect at least three of them to be imminently acquired "as finances get shaky".

On Thursday, Treasury Secretary Scott Bessent tried to downplay recent concerns about neocloud firms, calling them "a small component of the overall ecosystem, external" on CNBC.

Neocloud firms often finance themselves by signing long-term lease contracts with major tech customers who need quick access to computing power.

Firms can then borrow money using those contracts – plus the AI chips they purchase – as collateral, explained analyst Cory Johnson of "The Quiet Period" IPO research outfit.

He said debt is common across neocloud firms because the hardware has to be paid for up front.

Take the industry leader: CoreWeave. It's a fraction of the size of some of the Big Tech companies it serves.

But Johnson believes lenders sometimes consider the creditworthiness of CoreWeave's customers, like Microsoft or Meta, more than the company's when they lend.

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