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.
The warning lands as CoreWeave (CRWV), the largest listed AI cloud firm, pays record rates on its debt. Musks own SpaceX, meanwhile, says it just closed $40 billion of borrowing.
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Can CoreWeave Survive Its Debt Bill？
These firms, known as neoclouds, buy Nvidia chips and rent the computing power to AI developers. Most borrow heavily to do it.
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.”
CoreWeave is the sectors 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.
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.
The shares are about 70% below their peak. Fidelitys Jurrien Timmer has flagged debt as the AI bubble risk.
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Chief Executive Mike Intrator told staff in a memo that its backlog covers its borrowing.
“We are confident in our backlog which more than supports all of our debt obligations.”
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Why Musk Says SpaceX Can Borrow When Others Cannot
Musk credited SpaceXs 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.
Earlier reports put the deal at about $10 billion in bank loans and $30 billion in bonds. SpaceX has not published the terms.
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.
For shareholders and bondholders of AI-only cloud firms, Musks forecast is clear, that some will make it through, he wrote, “but not many.”