CoreWeave vs Nscale

Cramer: AI data center stocks face earnings test

CNBC's Jim Cramer warned that next week's earnings from leading neoclouds CoreWeave and Nebius could further test investor confidence in the AI data center trade. Stocks rebounded after a turbulent election week that saw selling in AI infrastructure names. Cramer remains skeptical, citing unresolved concerns about data center spending and financing. Key upcoming events include Constellation Energy earnings on Monday, CPI inflation data and CoreWeave earnings on Tuesday, Nebius, Cisco, and Applied Materials earnings on Thursday, and the PPI report on Friday. Cramer highlighted CoreWeave's need to explain its expansion financing and debt management, and expects Nebius to show strong orders and completed data centers. The Fed's next move on interest rates, potentially influenced by inflation reports, is also in focus.

• CNBC's Jim Cramer warned that next week's earnings from CoreWeave and Nebius could test AI data center stocks.
• CoreWeave reports earnings on Tuesday after the close.
• Nebius reports earnings on Thursday before the bell.

CoreWeave Bond Yield Tops 16% as AI Debt Markets Tighten

Debt markets are signaling higher financing costs for AI data center builders. CoreWeave's 2032 bond yield has climbed above 16%, and its five-year credit default swaps spiked to over 1,289 basis points, before easing to around 1,155. Rising CDS spreads also affect Nvidia, Broadcom, Amazon, and Oracle. Concerns about new data center hurdles under Democratic governors and a Democratic Congress could delay or scrap some spending. Goldman Sachs estimates that 45% of planned US data center capacity could be impacted by moratoriums, particularly in Texas. Despite the stress, AI debt issuance continues: $67 billion in five deals since October 29, with forecasts of $440 billion in hyperscaler debt issuance next year. Goldman notes hyperscalers reported negative free cash flow in Q3. BofA projects AI credit issuance to rise to $685 billion in 2027, then fall to $531 billion in 2028. The market watches whether AI spending generates sufficient cash flow to justify further debt.

• CoreWeave's 2032 bond yield (9.625% coupon) exceeded 16%.
• CoreWeave's five-year CDS spiked above 1,289 bps on Thursday, easing to ~1,155 on Friday.
• Nvidia's CDS rose 76%, Broadcom's 49%, Amazon's 44% in the last month.

Microsoft to reduce neocloud partners amid AI strain

Microsoft is consolidating its relationships with neocloud providers as the AI infrastructure market faces strain from rising borrowing costs and debt concerns. The company has partnered with multiple neoclouds, including CoreWeave, Nebius, Chronoscale, IREN, Lambda, and Nscale, but is now evaluating which to continue with, prioritizing its own data centers. Microsoft has already decided not to renew a deal with Oracle and has cut back work with Nscale. CFO Amy Hood cited delays in GPU cloud contracts impacting Azure growth, and capex reached $45.2 billion in the latest quarter. Industry reviews count 323 neoclouds, many predicted not to survive. The move signals a tightening in the AI infrastructure ecosystem.

• Microsoft is reducing the number of neocloud partners it works with, focusing on key suppliers and its own data centers.
• Microsoft has decided not to renew a deal with Oracle and has cut back work with Nscale.
• Microsoft's capital expenditures and finance leases reached $45.2 billion in the latest fiscal quarter.

Aker CEO dismisses Microsoft Nscale contract loss as minor

The CEO of Aker ASA, Øyvind Eriksen, the largest investor in UK AI infrastructure startup Nscale, downplayed Microsoft's withdrawal from a data centre deal as a "minor contract". Speaking during Aker's Q3 results presentation, Eriksen reassured investors ahead of Nscale's planned US IPO targeting a $35bn valuation. He noted that since Nscale's Series C funding round, the company's activity and contract portfolio more than doubled, and the termination was expected. Microsoft cancelled the deal to lease compute capacity from Nscale's Essex data centre due to anticipated power supply issues. Nscale is reportedly close to a new multibillion-dollar deal with Anthropic, which would increase its commitment in West Virginia. Aker owns approximately 23% of Nscale, valued at $3.31bn based on the Series C valuation.

• Aker ASA CEO Øyvind Eriksen called Microsoft's cancellation of a data centre deal with Nscale a 'minor contract'.
• Aker owns approximately 23% of Nscale, valued at $3.31bn based on Nscale's Series C valuation.
• Microsoft cancelled the lease agreement due to expected power supply issues at Nscale's Essex data centre.

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