A Cloudy Forecast? Grading the Neocloud Stocks
Neocloud stocks dropped sharply on Monday, after Tesla ($TSLA) and SpaceX ($SPCX) CEO Elon Musk made negative comments about the tech sub-sector.
The ever-quotable Musk said neocloud companies face “guppy-level death and consolidation.” Musk also stated that neocloud firms that have no independent revenue streams outside of data centers would have difficulty obtaining funding.
Musk might have some insight into this issue, as he just obtained $40 billion in financing for SpaceX. The funds are expected to be used to purchase Nvidia ($NVDA) GPUs and other AI-related products.
Despite this, the neocloud stocks came roaring back on Tuesday, with some seeing double-digit gains. Are there opportunities in the neocloud sub-sector?
What Is a Neocloud Stock?
A neocloud can be described as a cloud company that is built to serve the AI ecosystem. The specific focus on AI differentiates neocloud stocks from traditional hyperscalers like Microsoft’s Azure, Amazon’s AWS, and Google Cloud.
Meet the Neocloud Stocks
Perhaps the best-known among these names is CoreWeave ($CRWV), which rents out Nvidia GPUs in bulk for AI-related tasks. CoreWeave is closely associated with Nvidia, with close financial connections to the AI chipmaker, and has a market capitalization of $31.2 billion.
Amsterdam-based Nebius Group ($NBIS) competes with CoreWeave, building data centers and renting out high-performance GPU clusters. Nebius boasts a market cap of $43.5 billion.
Australia-based IREN ($IREN), formerly a bitcoin mining company, provides data centers that are powered by renewable energy. IREN has a market cap of $10.5 billion.
Nebius Group NV (NBIS)
The best chart among this group belongs to Nebius. This stock gained about 11% Tuesday, after the company announced it had established a $3.5 billion credit line with Citi. The capital will be used to fund data centers and GPU purchases.
While Nebius is trading below its 50-day (blue) and 200-day (red) moving averages, Tuesday’s bounce occurred just above a major support level at $145.80 (black line).
Nebius doesn’t have a great chart, but as we’ll see in a moment, it’s far from the worst in its group. Nebius is scheduled to report earnings on November 11.
GRADE: C+
CoreWeave Inc. (CRWV)
CoreWeave had its initial public offering 18 months ago. The stock quickly shot from just below $40 to $187, making it one of the hottest IPOs of 2025.
Recently, CoreWeave reached its lowest levels since those early trading days. The stock has broken down from a descending triangle pattern (black lines).
That pattern suggests the stock could fall further, but CoreWeave could raise its grade by closing above a former support level at $60.55 (horizontal line). CoreWeave is scheduled to report earnings on November 16.
GRADE: C
IREN Ltd. (IREN)
A descending triangle similar to the one on CoreWeave’s chart also appears on the chart of IREN below (black lines).
However, on a percentage basis, IREN is slightly further from reclaiming a key support level at $28.93 (horizontal line). IREN is scheduled to report earnings on November 5.
GRADE: C-
Bottom Line
I’m getting a lot of questions about this group of stocks. Perhaps some traders see them as a bargain, because they’ve lost so much value.
However, caution is warranted. This is a speculative, volatile area of tech. I’m refraining from opening any positions in this sector for now.
At the time of publication, Ponsi had no positions in any securities mentioned.
