Photo by Filipe Nobre

Last week was a minor earthquake in the AI world, and DeepSeek’s latest release could mean an even bigger one this week. Focusing first on last week, CoreWeave, the largest of the neoclouds, is now in the Intensive Care Unit. The interest rate on its long-term debt passed 16 percent. This is a huge deal.

Neoclouds are a big part of the AI infrastructure. They buy and rent out computing capacity to AI users. And in the AI boom, they are heavy borrowers. When they have to pay over 16 percent on the money they borrow (junk bond territory is 8.0 percent), they do not have a terribly viable business model.

And the troubles for the AI industry went far beyond CoreWeave. As I pointed out last week, even the stock market was taking notice.

The bad news from Wednesday carried through for the whole week. Here’s the story for the publicly traded neoclouds, along with Oracle, by far the leading target for collapse among the hyperscalers.

We’re still some distance from zero; all of these companies still have very high market caps, especially for businesses that are losing money hand over fist. But it’s like the old joke about 10,000 lawyers at the bottom of the ocean: a good start. At least some investors in the bond market are beginning to approach AI (or SI) companies like they would any other business, asking about their current and expected future profits, and not getting all giddy about anything involved with AI.

That is a huge deal, since as many of us have been arguing for some time, it’s hard to tell the story where the AI companies have the sort of........

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