Alexander Bittan
Long-Term Frontier-Technology Investor, Neuralink/Anduril/Perplexity
Rising rental rates even for older GPUs strengthen the case that IREN and CoreWeave's compute assets retain value. The quoted a16z data puts year-to-date rental gains at 160% for H200s, 120% for B200s and 35% for H100s; even six-year-old A100s rent for more than at the start of the year. x.comÂ
Harder-to-build data centers should let neoclouds sell all new capacity at massive premiums for the next couple of years. CoreWeave and IREN have fallen too far: deals pay back in about two years, chips seem to last much longer than expected, and huge backlogs meet inference demand expected to rise exponentially. IREN's secured power should pay off big; demand also supports Nebius. Very long term, it is unclear whether hyperscalers could meet the market's needs without neoclouds. x.com x.com x.comÂ
Older GPUs retaining value after years of rental income is a positive for IREN's GPU-cloud economics. Per @wallstengine, an A100 system with 9,600 GPUs and servers is listed for $59.7 million, about $6,200 per GPU. Against an estimated original rack cost of $25,000 per GPU, that suggests a 25% residual after six to seven years; the GPUs also rented for $2-10 an hour for six years. The residual is based on an asking price, not a sale. x.com x.com x.comÂ
IREN, Nebius and CoreWeave's rental economics look stronger as B300 rental rates rise faster than hardware costs. Rates rose over 20% in the past month, per a chart shared by @matthew_sigel; across this year, rental prices climbed about 60% versus a 20-30% rise in B300 costs, even as neo-cloud stocks fell last week. x.com 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
Scarce compute prices Nebius's and CoreWeave's GPU rentals by marginal-token value, not chip cost. Better models lift installed watts' value faster than new GPUs devalue old ones. SpaceX says contracts renew at higher dollars per watt; CoreWeave's A100 deal runs to 2029, and Nebius's Blackwell auction cleared 15% above its prior high. The 2-3 year GPU-life bear case keeps getting set back. If supply catches demand, older GPUs would be repriced by performance per watt, but that looks far off. … Show more
Lower AI token prices drive more usage, making GPUs scarcer and raising rental rates for neocloud capacity. Gavin Baker reports rising GPU rental prices even as token prices fall; the GPU constraint never left, and higher rental prices make the ARR math work again. x.com x.comÂ
AI data-center investment needs outside AI spending to rise 33-fold by 2030 to break even. Hyperscalers hold $4.5 trillion in debt and future liabilities, but corporate and SaaS token spending outside circular deals is only $60 billion annualized against a $2 trillion break-even ARR. SK hynix says memory shortages may last until 2031, raising capex and CoreWeave default risk; Mitsubishi warns turbines are booked through 2031 and cost 400% more, delaying CoreWeave and Oracle data centers. x.com … Show more
Rising GPU rental rates and Anthropic's compute margins challenge claims of collapsing demand for CoreWeave's capacity. The WSJ reported Anthropic's first-half revenue of $16.3B against $9B in compute and infrastructure spending; Bloomberg reported its Q3 compute margin above 40%. Long contracts and fully amortizing loans cushion demand declines but cap upside. Despite the challenging neocloud model, CoreWeave's risk/reward is by far the best and its quality well ahead of peers. x.com x.com … Show more
Nebius, CoreWeave and IREN are token factories set to print money, and the drop in older-chip rents is no sign of an AI bubble. H200 rent fell from $7 to $4 an hour in three weeks, per @ThierryBorgeat, but that only unwinds a spike driven by bottlenecks and demand, leaving it still about 2x higher than in March, while the current generation stays in demand. x.comÂ
CoreWeave's leveraged GPU rentals make its financing loop vulnerable to higher rates or a slipped contract. Despite $2.5B+ quarterly revenue and $104B backlog, debt is $21-25B with up to $68B in potential future obligations, $35-39B planned 2026 capex and -$4.7B free cash flow last quarter. Nvidia's $2B equity investment funds purchases of Nvidia chips, and Nvidia backstops $6.3B of unsold capacity through 2032. Demand is pulled forward with debt; either trigger unwinds the loop. x.comÂ
Rising GB300 rental prices make the 30% drop in GPU-access providers IREN, Nebius and CoreWeave hard to justify. @ViralMuzik1989 reports a 32% increase in GB300 rental prices over 30 days, from $9.42 to $12.42. x.comÂ
