What Is a Neocloud? The GPU Clouds Powering the AI Boom

What it claims

Neoclouds are AI-focused infrastructure-as-a-service providers. They mostly sell access to large Nvidia GPU clusters, plus the networking, storage and software to run AI workloads. The named players are CoreWeave (Nasdaq: CRWV, listed March 2025, Nvidia-backed), Nebius Group (Nasdaq: NBIS, Amsterdam, formed from Yandex's international business), the private Lambda, Crusoe and Fluidstack (Lambda plans an IPO), and IREN, a Bitcoin miner that now runs its own AI cloud. The article's central point is financial strain. Depreciation, debt costs and a Gartner consolidation forecast pushed the sector's shares down in October 2026.

How it works

The model rests on three scarce inputs. The first is Nvidia GPUs, where early access to new systems is a selling point. The second is power and space: clusters need hundreds of megawatts and liquid cooling, so providers either build data centers or lease "powered shells," often from former Bitcoin miners. The third is capital. GPUs are usually bought with debt secured by the chips and by long-term customer contracts.

Customers either reserve capacity on multi-year agreements or pay hourly on demand. The provider's margin is GPU revenue minus purchase, power and financing costs. Hyperscalers are among the biggest customers, renting neocloud capacity when their own data centers fall short.

Evidence

• Depreciation, Q2 2026: CoreWeave booked nearly $1.4 billion in depreciation and amortization against about $2.6 billion revenue. Nebius booked about $260 million against $582 million.
• Miner conversions: Bernstein counts roughly 7 GW across 19 deals worth over $135 billion in the two years to July 2026. That is under a quarter of the miners' 30 GW planned pipeline.
• Named contracts:
• Microsoft and IREN: about $9.7 billion over five years.
• AWS and Cipher: about $5.5 billion over 15 years.
• TeraWulf and Anthropic: a 20-year Kentucky lease worth about $19 billion.
• Google guarantees Fluidstack's lease payments at TeraWulf and Cipher sites.
• Anthropic also leases Hut 8 capacity through Fluidstack.
• Credit stress, as of 21 October 2026:
• CoreWeave's unsecured debt yielded about 15%.
• The cost of insuring its bonds against default rose 30% in a month.
• Its shares fell 29% in October, to about $34 billion against a 2025 peak near $90 billion.
• Nebius fell 27% despite far less net debt, and IREN fell 32%.
• Gartner, 14 October 2026: Gartner cites "cost pressure and a lack of a differentiating business model." It also estimates more than $3.5 trillion of AI infrastructure spending could face impairment by end-2030 at current spending rates.

Limits

This is a news explainer for investors. It gives no GPU pricing, instance types, SLAs, regions or software stack details for any provider, so it cannot inform a vendor choice on technical grounds. The counter-view comes from CoreWeave co-founder Brannin McBee. He says nearly all of the company's 2027 capacity is sold, with contracts running into 2028 and beyond. Token-based alternatives (Render, Akash, io.net) are named as peer-to-peer competitors but are not evaluated.