Neocloud Stocks Plunge as Rising Rates and AI Overspend Fears Trigger Broad Selloff

Quick Read

• CoreWeave and Nebius are tumbling despite triple-digit revenue growth, as rising long-term rates reprice their capital-heavy business models.

• The 30-year Treasury yield hit a 19-year high, making each new neocloud project more expensive and compressing the future value of revenues.

• Investors are reassessing the sustainability of massive AI spending commitments amid concerns over off-balance-sheet liabilities.

Shares of neocloud operators are sliding sharply in midday trading as investors reprice the sector against a fresh wave of AI spending concerns and a rapid uptick in long-term interest rates. CoreWeave (NASDAQ:CRWV) fell 6.8%, Nebius Group (NASDAQ:NBIS) dropped 5.2%, and TeraWulf (NASDAQ:WULF) declined by 6.5%.

Overspend Fears and a 19-Year Yield High Spark the Selloff

The current selloff is driven by three converging factors. First, major AI developers reported massive annualized revenue runs (ARR) that, while historically impressive, fell short of the elevated whisper numbers circulating in Silicon Valley. Anthropic informed investors that its ARR reached $65 billion by the end of July, while OpenAI recently reported an ARR of $40 billion. These figures pale in comparison to earlier industry whispers, with some investors anticipating Anthropic’s ARR to exceed $80 billion. Furthermore, Reuters reported Anthropic is projecting 2028 revenue between $190 billion and $200 billion, a significant gap compared to previous market expectations of an exit valuation next year reaching $400 billion to $500 billion.

Second, a recent Wall Street Journal analysis highlighted that nine leading technology companies hold approximately $3 trillion in off-balance-sheet commitments, primarily tied to AI infrastructure. These obligations are expanding at a faster pace than traditional capital expenditures, which totaled around $600 billion over the past year. This report has reignited debates over the long-term durability of hyperscaler AI commitments, directly impacting the valuation metrics applied to neocloud operators.

Third, and most critical for the neocloud sector, long-term interest rates have surged dramatically. The 30-year Treasury yield currently sits at 5.33%, marking a 19-year high, while the 10-year yield at 4.71% is in the 96th percentile of the past twelve months. Neoclouds represent the most capital-intensive business model in the AI ecosystem. As the cost of capital increases, the economic viability of new projects deteriorates, and the market applies a heavier discount to revenues expected several years in the future.

The Gap Between Business Momentum and Today’s Repricing

Despite the market pressure, recent operational metrics remain robust. CoreWeave reported second-quarter revenue of $2.6 billion, representing a 112% year-over-year increase, and successfully implemented a 25% price increase across its service catalog in July. Meanwhile, Nebius achieved second-quarter revenue of $582.3 million, up 454% year-over-year, with a recent capacity auction clearing 15% above the previous highest Blackwell pricing. Additionally, TeraWulf secured a twenty-year lease agreement with Anthropic at its Justified Data Campus.

Recent stock performance had previously reflected this strong operational momentum. CoreWeave entered the session up approximately 45% over the past month and 48% year-to-date. Nebius was up about 51% over the past month and 221% year-to-date, while TeraWulf remained up 53% year-to-date and 96% over the past year.

This divergence represents the critical disconnect for investors to monitor. While underlying operational news continues to trend positively, the market is actively repricing the financing environment supporting these businesses. In contrast, the fundamental demand story driving the sector remains intact.

The Big Picture Today: Rotation Out of AI Infrastructure

The intraday market action fits a familiar defensive pattern. Healthcare, consumer defensive sectors, utilities, and energy are trading higher, while the technology sector is by far the largest laggard. When long-term yields spike concurrently with questions surrounding the durability of AI spending, capital naturally rotates out of the highest-beta, most leveraged AI names. Neocloud operators sit at the sharp end of this reallocation.

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