Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

17 days ago

Neoclouds like CoreWeave and Nebius are experiencing rapid growth due to hyperscaler demand for AI infrastructure, but they face profitability challenges due to high debt and cash flow mismatches.
Hyperscalers such as Microsoft and Meta are making massive long-term commitments to neoclouds, exceeding $145 billion, to quickly access latest GPUs, optimize utilization, and shift costs from capex to opex.
Nvidia plays a key role through circular financing, investing in neoclouds like CoreWeave and Nebius while also serving as their GPU supplier and providing financial backstops for unsold capacity.
CoreWeave relies heavily on GPU-backed debt, with rising interest expenses pressuring profitability, while Nebius has a stronger balance sheet but still faces significant funding needs for expansion.
The neocloud model balances surging AI demand with risks from rising debt, interest rates, and dependence on Nvidia's support, raising questions about long-term sustainability.

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