Elon Musk issues a warning for 'AI neoclouds' as SpaceX borrows $40 billion for chips

“As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers,” he said on X.

Musk predicted that more than 200 “neoclouds” — newer companies that rent out AI computing power — will consolidate, with only a few surviving.

The episode shows how costly the AI computing race has become. Building large clusters of AI chips can require tens of billions of dollars. Companies with diverse revenue and strong credit can still borrow; firms whose entire business depends on AI infrastructure face a tougher time as lenders become more selective.

Venture capitalist Chamath Palihapitiya had earlier said many neoclouds appear poorly funded and badly run. He argued that Amazon, Microsoft and Google are moving slowly on deals and prefer to keep computing power for their own use. He said delays in building data centers could leave many chips and half-finished projects sitting idle or failing to earn enough to cover financing costs in 2027.

Lately, financial markets have become increasingly worried about the payoff from massive AI spending. That has pressured AI-linked stocks and the broader market. Nasdaq futures traded near 29,080 as of this writing, down sharply from above 30,000 early this month.