Elon Musk, leading SpaceX, warned that AI infrastructure companies lacking a stable revenue base will either fail or be absorbed by other firms. He claimed that the debt market has nearly completely cut off funding for companies without revenue unrelated to AI data centers (AIDC).
According to the IT industry on October 26, SpaceX has completed a $40 billion debt raise for purchasing AI semiconductors. The company secured investor funds based on revenue from its satellite internet service Starlink and space launch operations. This funding comes amid growing caution in the financial markets regarding AIDC investments.
Musk noted that the attitude of lenders has changed significantly in recent weeks. He stated, "In the past few weeks, the debt market has almost completely blocked access to funding for companies with significant revenue unrelated to AI data centers." He asserted that for companies without clear income sources outside of AIDC, the door to loans is effectively closed.
The specific target Musk identified is 'NeoCloud,' a term referring to emerging cloud companies that lease GPU (graphics processing unit) and data center equipment for AI operations. Musk predicted that more than 200 NeoCloud firms will face failure or consolidation, saying, "Some will survive, but not many."
Musk believes that most AI infrastructure companies without stable revenue will either fail or be consolidated. This contrasts with SpaceX's ability to attract large-scale funding based on revenue from Starlink and space launches.
Indicators reflecting the funding pressures for AIDC are emerging in the U.S. financial markets. CoreWeave, a leading NeoCloud firm, saw its unsecured bond yield soar to 15% earlier this month. Rising bond yields indicate that investors are demanding higher interest rates in exchange for lending money.
As of October 14, CoreWeave's bond yield maturing in 2032 was approximately 14.8%, double that of Oracle's 2032 maturing bonds (around 7.24%). The U.S. credit rating agency S&P has rated CoreWeave's credit as speculative grade B+, indicating relatively low repayment capability.
Major tech companies are not exempt from these trends. According to LSEG data, Alphabet, Amazon, Meta, and Oracle issued over $228 billion in corporate bonds by October 13 this year, more than double last year's total issuance. Meta recently reported a negative free cash flow for the last quarter, leading industry analysts to anticipate additional funding for AI infrastructure investments.
Morgan Stanley projects that global data center spending focused on AI will reach $2.9 trillion from 2025 to 2028. It estimates that big tech can only cover about half of this with their own cash flow, leaving a funding shortfall of approximately $1.5 trillion. This gap is primarily filled by private credit.
Gartner has analyzed that AIDC operators need to generate $8.5 trillion in revenue by 2030 to recoup their investment costs. If current investment levels continue, there is a warning that over $4 trillion in assets could be at risk of depreciation by 2032.
* This article has been translated by AI.
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