Neoclouds are specialized infrastructure providers that rent out high-end GPU clusters for AI training and inference. Unlike hyperscalers, these firms focus exclusively on AI workloads, offering dedicated capacity to labs and tech companies through multi-year contracts or on-demand hourly billing.
The sector has deep roots in the crypto industry, as many providers transitioned from Ethereum mining or repurposed Bitcoin mining infrastructure. Bitcoin miners have secured 7 gigawatts of power capacity across 19 deals worth over $135 billion in the two years leading up to July 2026.
Financial performance faces challenges from high depreciation costs. In the second quarter of 2026, CoreWeave reported $1.4 billion in depreciation against $2.6 billion in revenue, while Nebius recorded $260 million in depreciation against $582 million in revenue.
Market pressure intensified in October 2026. Gartner predicts that over 80% of independent neocloud providers may cease operations by 2030 due to cost pressures. CoreWeave shares dropped 29% in October 2026, bringing its valuation to $34 billion from a 2025 peak of $90 billion.
Despite market volatility, demand remains high. CoreWeave reports that nearly all its 2027 capacity is already reserved, with contracts extending into 2028. Companies like TeraWulf have also secured long-term leases, such as a 20-year agreement with Anthropic valued at approximately $19 billion.
