Nebius says demand for AI computing is pushing rental prices up, even as investors worry about the debt behind companies that rent it out.
Nebius, a company that rents out AI computing power, says prices for that power are rising faster than it expected. Its chief revenue officer, Marc Boroditsky, told CNBC the company held an auction for capacity on Tuesday and prices kept climbing. The comments come as investors question whether firms like Nebius have a sound business.
Nebius is a "neocloud," a new kind of company that spends billions on Nvidia's AI chips, builds data centers and rents out the computing power. Boroditsky said that if Nebius brought its 2027 capacity online, it would sell out. He said 2028 could see "the same type of dynamic." Asked if prices per megawatt would keep rising ahead of expectations, he answered: "Yeah." Price per megawatt shows how much a company can charge for a set amount of computing capacity.
Crusoe, an Nvidia-backed company building data centers, described something similar. CEO Chase Lochmiller said A100 chips now rent for more than in 2020 or 2021. He said H100 chips rent for more than when they were first deployed in 2023. Both are older Nvidia chips.
The worry is debt. CoreWeave, one of the biggest neoclouds, saw the cost of insuring against its default reach levels generally viewed as a sign of distress. That cost is shown in the spread on its five-year credit default swaps. Its bond yields also rose. Shares of Iren and Nebius have dropped sharply over the last month.
Boroditsky said Nebius is not in CoreWeave's position because it is not carrying the kind of debt CoreWeave is.
Investors are debating how fast Nvidia's chips lose their economic value as stronger ones arrive. These companies need to keep renting older chips at good prices to earn back what they spent. Lochmiller's numbers suggest that, for Crusoe at least, older chips are holding up well.
If renting AI computing stays expensive, the AI tools your business pays for may not get cheaper soon. The article does not say how these prices reach customers. It also shows that some providers carry more financial risk than others.
Shares of Nebius, CoreWeave, Iren and Applied Digital rose on Wednesday after the SpaceX numbers. Boroditsky said the results confirm that supply keeps falling far behind demand. Whether that holds, and whether debt-heavy firms can manage their borrowing, is not yet known.
AI computing is still in short supply and pricey, so expect little relief on costs, and watch how much debt your AI providers carry.
OpenAI has about $11 billion in hand at a $1.25 trillion value, below its first ask. Microsoft and NVIDIA shareholders have reason to watch what comes next.
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