Neoclouds have limited cybersecurity. Next time agents successfully go rouge, they'll try taking over a neocloud to run more copies. This is bad. Thus: neoclouds should greatly strengthen their cybersecurity and every company with strong cyber models should help with that.

Neocloud Lambda has raised $1B in private debt to buy Nvidia AI chips and lease them to Microsoft. It's the latest in a string of loans, underscoring the high cost of the AI boom.

Neoclouds are scaling faster than the hyperscalers ever did because AI turned scarce power and GPU-ready infrastructure into the biggest bottleneck in computing. $CRWV reached $2.6B of quarterly revenue by quarter 26 versus ~$600M for $AMZN AWS at the same point while $NBIS is already ~$580M by quarter seven as both monetize capacity in a market where demand significantly exceeds supply. What makes the model even more durable that the demand is increasingly contracted with CoreWeave sitting on $104B of backlog and Nebius above $46B as $MSFT and $META effectively help finance outside capacity they cannot build fast enough on their own.

Neoclouds: A Short Story -> $NBIS: 242% YTD - "Nebius will take care of you" ( $NVDA's Jensen Huang). -> $CRWV: 67% YTD - debt machine. -> $IREN: 58% YTD - excessive dilution. Nebius will become a $100B company in Q3.

The neocloud trade looks very different when you compare CapEx to current revenue: • $CRWV sits around ~3x because more of its infrastructure is already producing revenue with their advantage coming from operating massive AI clusters for some of most demanding customers in market • $NBIS is closer to ~10x as it builds ahead of revenue but more interesting opportunity is moving higher in the stack through training, inference and agents to increase value of every megawatt deployed • $IREN sits around ~15x because its still aggressively building before cloud revenue fully shows up with advantage coming from power access and bringing large amounts of AI capacity online efficiently CoreWeave is furthest along in converting CapEx into revenue but pays highest borrowing cost around 8% while IREN is spending most aggressively and carries the lowest reported funding cost around 2%.

The neocloud trade is starting to become more about who can finance that demand cheapest: • $CRWV is paying 8.3% on ~$35B of debt which is why interest expense is heading toward ~$900M a quarter even with demand still strong. • $NBIS has seen its rate rise from 2.3% to 5.5% in three quarters but customers are still prepaying a large portion of CapEx which keeps the funding model way cleaner than CoreWeave’s. • $IREN sits at the other extreme at just 1.7% partly because more of its funding comes through converts where cost shows up as dilution instead of interest but also lenders are still giving much cheaper capital to energized power and interconnects than to GPU-heavy balance sheets. Thats why cost of capital is becoming almost as important as demand because all three can grow while financing determines who keeps more of the upside.