Neocloud companies have become a central part of the artificial-intelligence infrastructure race, supplying the Nvidia GPU capacity needed to train and run modern models. But the business is now facing a tougher test: high borrowing costs, rapid hardware depreciation and doubts about whether specialist providers can remain independent.
According to Decrypt, companies including CoreWeave and Nebius have built businesses around renting large GPU clusters to AI laboratories, startups and major technology companies. Several Bitcoin miners, meanwhile, are converting power-intensive sites into AI data centers, creating another route into the market.
The sector’s shares sold off sharply in October 2026 after Gartner warned that more than 80% of neocloud providers could stop operating independently by 2030. The forecast has focused attention on whether demand for AI computing will generate sufficient returns to cover the enormous cost of chips, electricity, facilities and debt.
What neoclouds do
A neocloud is a specialist infrastructure-as-a-service provider focused mainly on artificial-intelligence workloads. Unlike Amazon Web Services, Microsoft Azure or Google Cloud, which offer a broad range of digital services, neoclouds primarily provide access to high-end GPU clusters, together with the networking, storage and software required to use them.
GPUs are crucial for both training AI models and inference, the process of using a trained model to respond to requests. Neocloud customers can reserve capacity through multi-year agreements or obtain computing power on demand. The providers earn revenue from that capacity while paying for the hardware, electricity, data-center space and financing behind it.
CoreWeave is the best-known listed pure-play neocloud. It is backed by Nvidia and listed in March 2025. Nebius Group, based in Amsterdam, was formed from the international business of Russian technology company Yandex. Privately held providers include Lambda, Crusoe and Fluidstack, while IREN has moved from Bitcoin mining into AI hosting and its own AI cloud.
Neoclouds are conventional companies rather than blockchain projects, so they do not issue a native token. Their shares trade on stock exchanges. Decentralized physical infrastructure networks such as Render, Akash and io.net are a separate, token-based approach to supplying computing power.
A business built on chips, power and debt
The neocloud model depends on three limited resources: advanced chips, electricity and capital.
Providers purchase large numbers of Nvidia GPUs and connect them into clusters designed for AI. They must also secure facilities with enough power and cooling, either by constructing data centers or leasing existing “powered shells.” Bitcoin miners are valuable partners in this respect because they may already have land, grid connections and permits that would otherwise take years to obtain.
The financial burden is substantial. GPUs are expensive and can lose value quickly, while neoclouds often acquire them with debt backed by the equipment and customer contracts. The effect of depreciation was visible in the companies’ second-quarter 2026 results. CoreWeave reported almost $1.4 billion in depreciation and amortization against approximately $2.6 billion of revenue. Nebius recorded about $260 million of depreciation and amortization against revenue of $582 million.
The industry also has an unusual relationship with the larger cloud companies. Hyperscalers can rent neocloud capacity when their own facilities cannot meet demand, meaning some of the companies that compete with neoclouds are also their customers.
Crypto miners become AI hosts
CoreWeave itself began in 2017 as an Ethereum miner using GPUs. Ethereum’s move to proof of stake in 2022 ended GPU mining on that network, prompting the company to redirect its hardware toward cloud and AI workloads.
Other miners are now making a similar transition. Bernstein said that, in the two years to July 2026, miners contracted approximately 7 gigawatts of power capacity across 19 deals worth more than $135 billion with hyperscalers, neoclouds and chipmakers. That figure represented less than a quarter of the 30 gigawatts in the miners’ planned power pipeline.
Several major technology and AI companies have signed large arrangements. Microsoft agreed to a roughly $9.7 billion, five-year GPU cloud contract with IREN. Amazon Web Services signed a 15-year lease with Cipher, a Bitcoin miner turned AI host, valued at about $5.5 billion. Google guarantees Fluidstack’s lease payments at sites operated by TeraWulf and Cipher, while Anthropic is leasing capacity from TeraWulf and, through Fluidstack, from Hut 8.
TeraWulf also signed a 20-year lease with Anthropic for its Kentucky campus. The agreement is expected to generate about $19 billion, exceeding TeraWulf’s entire market value at the time.
October’s market pressure
Gartner’s October 14 forecast said cost pressure and a lack of differentiated business models could force more than 80% of neocloud providers to stop operating independently by 2030. Gartner also estimated that more than $3.5 trillion of AI infrastructure spending could be exposed to impairment by the end of 2030 if providers continue spending at their current pace.
Credit markets have reflected the concern. By October 21, CoreWeave’s unsecured debt was yielding about 15%, while the cost of insuring its bonds against default had risen 30% in one month. CoreWeave shares had fallen 29% during October, leaving the company valued at about $34 billion, compared with a peak of roughly $90 billion in 2025. Nebius was down 27% over the same period, and IREN had declined 32%.
The expansion case has not disappeared. CoreWeave co-founder Brannin McBee said nearly all of the company’s 2027 capacity was already sold, with contracts extending into 2028 and beyond. The central question for the sector is whether strong demand for AI computing will translate into enough cash flow to repay its heavy investment and borrowing, or whether larger companies will ultimately absorb many of the specialist providers.
Moneyiar market picture
Moneyiar market data at 23:23 on October 22, 2026, showed Neo at $2.1778224476, down 5.16% over 24 hours and 6.14% over seven days. Decimal was $0.458442584, up 1.85% over 24 hours and 1.54% over seven days. LAB was $0.046232132, up 2.17% over 24 hours but down 15.49% over seven days. Undeads Games was $0.2745662038, up 158.04% over 24 hours and 122.57% over seven days. These figures are market data and do not represent neocloud shares.
