Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The flow of funding which has helped the AI industry to grow rapidly could be running dry, at least for some firms in the cloud computing world, has warned.
The world's richest person declared last night that at least 200 'neoclouds' – companies which provide specialised cloud infrastructure to run AI workloads – could die or consolidate because they will struggle to access capital.
made the claim while also declaring that his SpaceX business has closed a $40bn debt deal to pay for the chips it needs for its artificial intelligence work.
He posted on X that firms who rely on revenue streams from AI datacentres are being cold-shouldered by lenders, saying:
As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers.
SpaceX closed $40B of debt for GPUs, but we're investment grade and have Starlink & launch revenue.
That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.
[Musk is referring to the guppy fish, the colourful freshwater aquarium fish notorious for suddenly dying in the aquarium, especially if there is a change in its environment.]
Neoclouds are specialist cloud providers that rent out clusters of high-speed Nvidia chips to firms looking to conduct AI training and inference.
They include , the US firm whose share price has fallen 60% in the last year as investors have questioned whether the huge investment in AI datacentres will be rewarded with lucrative cash flows.
The cost of insuring debt against default has climbed in recent weeks to levels that typically suggest credit distress – Musk's comments are unlikely ease investors concerns!
The agenda
UK tech company Computacenter is benefitting from the AI boom.
This morning, raised its financial outlook for this financial year, after "a very strong first half performance".
is winning business from the neoclouds – the AI cloud computing companies which Elon Musk reckons face 'guppy-level death'.
It told the City:
Sourcing revenue continued to grow strongly, primarily driven by hyperscale and neocloud customers in North America and the UK.
Group Services revenue was also ahead of last year, as strong organic growth in Professional Services, also driven by North America, more than offset a decline in Managed Services revenue.
There's such demand that now has a 'committed product order backlog' of £12.6bn, up from £9.3bn at the end of June, and "a strong pipeline of opportunities in North America and the UK".
It now expects adjusted profit before tax for FY 2026 to be at least £425m, ahead of forecasts of £387.1m.
Shares have jumped by 6.7% in early trading.
Musk also claimed on X overnight that some partly-built datacentres simply won't be completed.
As he put it:
I think we're going to see a lot of stranded compute in partially complete datacenters
Bloomberg, intriguingly, are questioning Elon Musk's claim that SpaceX has closed a $40bn debt deal to fund more chip purchases.
They've heard that talks over the pricing of this deal are still ongoing, and report:
As of late Sunday in New York, those conversations remained ongoing and the deal hadn't priced, people with knowledge of the discussions said. The parties are still working on finalizing the debt package in the coming days, the people said.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The flow of funding which has helped the AI industry to grow rapidly could be running dry, at least for some firms in the cloud computing world, has warned.
The world's richest person declared last night that at least 200 'neoclouds' – companies which provide specialised cloud infrastructure to run AI workloads – could die or consolidate because they will struggle to access capital.
made the claim while also declaring that his SpaceX business has closed a $40bn debt deal to pay for the chips it needs for its artificial intelligence work.
He posted on X that firms who rely on revenue streams from AI datacentres are being cold-shouldered by lenders, saying:
As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn't have substantial revenue independent of AI data centers.
SpaceX closed $40B of debt for GPUs, but we're investment grade and have Starlink & launch revenue.
That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.
[Musk is referring to the guppy fish, the colourful freshwater aquarium fish notorious for suddenly dying in the aquarium, especially if there is a change in its environment.]
Neoclouds are specialist cloud providers that rent out clusters of high-speed Nvidia chips to firms looking to conduct AI training and inference.
They include , the US firm whose share price has fallen 60% in the last year as investors have questioned whether the huge investment in AI datacentres will be rewarded with lucrative cash flows.
The cost of insuring debt against default has climbed in recent weeks to levels that typically suggest credit distress – Musk's comments are unlikely ease investors concerns!