From Investor's Business Daily, October 14:
CoreWeave (CRWV) stock plunged Wednesday as shares in other artificial intelligence-focused "neoclouds" also sold off after market research firm Gartner predicted an industry shakeout.
In a news release, Gartner forecast that by 2030 "cost pressure and a lack of a differentiating business model will force over 80% of neocloud providers to cease independent operations."
Gartner said failure to achieve sustainable return on invested capital on rapidly depreciating assets would result in a wave of asset write-downs.
Shares in Nebius (NBIS), Iren (IREN), Hut 8 (HUT), Digital Island (DOCN), Cipher Digital (CIFR) and Applied Digital (APLD) also retreated on Wednesday.
"Through 2030, AI data center owners would need to generate a cumulative $8.5 trillion in revenue to cover announced capital spending, financing costs, and a 12% return on invested capital, which we assume to be the hurdle rate of investment capital," said Gartner analyst Will Sommer, in a report.
Neoclouds: Huge AI Data Center Investments....