Musk and Huang split on neocloud outlook as AI funding strains grow

Elon Musk and Nvidia CEO Jensen Huang offered opposing views on the neocloud market for AI infrastructure, according to SCMP on October 28. Musk warned that more than 200 neocloud operators exist and that few will survive, saying firms without revenue beyond AI data centers are finding it harder to obtain loans. Huang said neocloud demand is beyond imagination and that short-term funding shortages will be resolved.

Neoclouds are cloud providers that rent out AI computing capacity on high-performance GPUs. The financing pressure is visible in the numbers. Bernstein Research estimated that CoreWeave may need $18 billion to $42 billion in additional funding to fulfill about $129 billion in contracted work.

CoreWeave's second-quarter revenue more than doubled year on year to $2.6 billion, while its net interest expense rose to $640 million from $267 million. Nebius recently secured a $3.5 billion bridge loan from Citibank and is considering long-term financing backed by more than $40 billion in contracts with investment-grade customers.

Chinese cloud and AI groups are also spending heavily. Alibaba, Tencent and Baidu together spent 131.9 billion yuan on capital expenditure in the second quarter, and all three posted negative free cash flow.

Long-term funding plans

In August 2026, Nvidia announced a plan with six financial institutions to help arrange more than $500 billion in long-term external funding, according to the report.