Jonah Lupton
CEO & CIO of FirstWave Capital, Long-Biased Growth
Scarce compute could ease financing for neoclouds such as Nebius and CoreWeave by shortening capex payback. Elon Musk says SpaceX's new deployments pay back in less than a year at current pricing; that bodes well for other neoclouds facing financing concerns if they achieve similar economics. GPU rental rates keep hitting highs, contrary to Gartner's claim of oversupply. x.com x.com x.com x.comÂ
Rising GPU rental prices make neoclouds such as Nebius a very profitable business at scale. Per Ornn Exchange, its B200 rental index hit an all-time high, with on-demand rentals averaging $7.88 per GPU hour. A B200 bought for $50k and depreciated over 4-5 years can generate about $70k of revenue a year, and that compounds across clusters of thousands of machines. x.com x.comÂ
AI agents' productivity over human labor should lift GPU demand and rates for neoclouds. The bottom looks in for CoreWeave, Nebius, Boost Run, Sharon AI and IREN. Gavin Baker says token prices can fall as revenue per GPU rises; paraphrasing Elon, even $38 per GPU-hour can pay off. CoreWeave's five-year fixed contracts may lag current rates; Boost Run has less capacity locked in. If SpaceX takes more growth, slower cash burn could rerate neoclouds, though smaller customers may pay less. x.com … Show more
Neoclouds can be an incredible business only if they turn delivered GPUs into revenue on time. Power delays are harder to remedy than commissioning issues; idle GPUs earn nothing while financing costs mount, especially for smaller operators and those reliant on colocation. Energized sites and vertical control help, but GPUs or secured power alone are not enough. IREN has financing secured and Nebius looks less exposed to Musk's debt warning; smaller players may struggle to fund expansion. x.com … Show more
Slower neoclouds such as CoreWeave face an uphill battle against SpaceX's faster data-center buildout. Demand may be effectively unlimited, but falling a year or two behind creates a $5-10B cash cost disadvantage they may not survive. Some could still pull off a miracle; SpaceX itself competes as a neocloud and has no reason to buy firms that cannot build data centers. x.com x.com x.comÂ
Lenders committing billions to neoclouds weaken the case that expansion will be starved of affordable capital. IREN secured $363M of GPU-backed financing and Nebius a $3.5B credit facility. Longer-lived, redeployable Nvidia GPUs are becoming more acceptable collateral; customer prepayments and cash flow from new contracts offer other funding sources as compute demand outpaces supply. x.comÂ
SpaceX's exclusive use of Nvidia GPUs and other supply constraints make Musk's 13-20 GW operational compute forecast for end-2027 too high. A substantial buildout is still incredibly enticing, but reaching that scale likely requires cheap capacity from struggling neoclouds, mostly through capacity deals and some acquisitions. Its attractive $40B off-balance-sheet GPU lease deal is only a drop in the bucket of the debt needed. Capacity can still grow quickly over time. x.com x.com x.com x.com … Show more
SpaceX's near-monopoly in global satellite internet, built on reusable rockets, should generate enormous cash flow to partly fund its AI compute buildout. Those cash flows should strengthen its credit profile and let it finance the rest more cheaply than pure-play neoclouds CoreWeave, Nebius and IREN, which SpaceX makes obsolete. Grok ensures deployed compute earns revenue if customers back out. There is no reason to own a pure-play neocloud when SpaceX is available. x.com x.comÂ
SpaceX's cheap capital and hardware execution give its compute buildout an edge over neoclouds and megacaps. It is quickly becoming the world's largest compute supplier: its 2033 bonds pay 5.65% versus 9.625% on CoreWeave's 2032 notes, and it deployed 110,000 GB300s at Colossus II in 64 days. It targets 10GW to "maybe" 20GW in 2027. One of Anthropic's biggest compute suppliers, SpaceX has up to $120.5B in estimated commitments through 2029, cancellable on 90 days' notice after early 2027. x.comÂ
Nvidia's need for neoclouds to survive underpins the case for Nebius despite financing fears. Elon Musk says debt markets have almost entirely shut off companies without substantial revenue outside AI data centers and expects most neoclouds to fail or consolidate; SpaceX competes with them. x.comÂ
Hardware suppliers and VC keep financing cash-hungry labs and neoclouds, making compute rental prices at CoreWeave, Nebius and IREN look artificially supported. Lab revenue growth is finally plateauing at 800% year over year after roughly tenfold equity gains across the stack over the last decade. The buildout is also crowding out the economy's appetite for debt. x.com x.com x.com x.com x.com x.comÂ
Accelerating compute demand could drive a V-shaped recovery in beaten-down neocloud stocks if SpaceX earnings confirm it. Nebius, CoreWeave and IREN are on watch. GPU spot rates rose rapidly: H100s $3.34/hour, H200s $4.93, B200s $8.13. Nebius had $582M Q2 revenue, nearly 6x YoY; CoreWeave a $129B backlog early in Q3; SpaceX 1.4 GW compute capacity last quarter, up from 400 MW a year ago. Whether SpaceX converts demand into meaningful revenue and EPS beats remains the key question. x.comÂ
