I know $CRWV, $NBIS, $IREN and other NeoClouds are popular amongst much of the Blossom community, but I have a differing view... What do these companies do? The vast majority of NeoClouds business is renting computing capacity to the hyperscalers to handle overflow demand. Said differently, they're safety valves for traditional hyperscalers like AWS, Google Cloud and Microsoft Azure. Why I have zero interest? When hyperscaler's datacenters eventually meet & exceed capacity demands, they'll no longer need the NeoClouds compute and just like that, the vast majority of NeoCloud's revenue will dry up. This isn't an 'if', but 'when' IMO... AND I didn't even talk about the debt! To be clear... I'm not suggesting they'll go out of business next year or even in the next few years, but there's far too much risk and too many unknowns for me to invest in the NeoClouds. In the end, a business model focused almost exclusively on renting raw GPU infrastructure is too limited and flawed IMHO. Maybe I'll be proven wrong, which is fine; wouldn't the first time and surely won't be the last. Plenty of other investments with far less uncertainty I'd rather risk my money on. To those investing in the NeoClouds, I sincerely wish you good luck.
2,268 views
23 Comments
Dividending
@dividending · 1d
You’ve said what I’ve been thinking and why I’ve also not invested in this space. I’d rather hold the massive tech companies with oodles of cash flow.
Solo FIRE
@solofire · 1d
Agreed, these businesses also don't have cashflow engines which hyperscalers rely on to fund the capex. With their huge debt burden and higher financing cost, I doubt if their businesses are sustainable long term.
Le Corb@lecorb · 1dEdited
@scottsinvesting an interesting position, but I would caution to make positions of “absolute” arguments. I am aligned to the position of a significant risk of the business model of renting to hyperscalers who have no interest in making money for others and would abandon renting when they can scale their own data centers. But I’ll give you a solid viable fundamental example where renting does work. Cohere and Coreweave are the primary landlords of compute, and are themselves renting from BCE the data center physical data center and physical infrastructure at the 400 megawatt data center in Saskatchewan, which is a “sovereign” data center “air gapped” to the US cloud act and lost likely will be federal and provincial clients for sensitive Soverign compute and data privacy. I’m certainly not arguing for the stock. I’m just providing a balanced critical viewpoint is necessary to understand there’s much more going on then an absolute argument on limited facts.
ETF Go
@etf.go · 1d
And here I thought I was missing something. I’m not afraid to admit I didn’t/dont even know what a Neocloud is. 😂 Appreciate you bringing some balance to the topic. Hope for all our sake you keep bringing the ‘opposing’ view to blossom where you see warranted. 👍
See the full comment section 👀Sign up for the full Blossom experience!
