Nebius and CoreWeave shares have come under renewed pressure this week as prominent hedge fund managers warn that the market is in an artificial intelligence bubble. CoreWeave has fallen more than 60% from its peak, erasing billions in value, while Nebius and other neocloud companies such as IREN, RUM Group and RIOT Platforms have also retreated sharply.
Citadel founder Ken Griffin told investors that the market is clearly in an AI bubble. His warning carries weight because Citadel Securities handles billions of dollars in daily trades. Ray Dalio of Bridgewater Associates similarly believes an AI bubble could burst as interest rates keep rising, and Michael Burry has taken short positions in some of the largest AI infrastructure names, including Nebius. The AI Stock Bubble Index has jumped to an elevated risk zone of 74, reflecting stretched valuations, funding hype and revenue uncertainty.
Wall Street analysts remain divided. JPMorgan argued that CoreWeave's financing needs reflect rapid expansion rather than weak project economics, estimating a typical five-year contract produces a mid-teens unlevered internal rate of return. Goldman Sachs upgraded CoreWeave to Buy, while HSBC maintained a Reduce rating and a $39 price target. Piper Sandler cut its Nebius price target to $185 from $237 and called CoreWeave its preferred name, while Gartner warned that more than 80% of neocloud providers could cease independent operations by 2030.
Debt market stress is also intensifying. CoreWeave's 9.625% bond due in 2032 trades at a yield to maturity of about 14.8%, and its 9.75% bond due in 2031 yields around 14.9%. Nebius Chief Revenue Officer Marc Boroditsky said the company is less exposed to debt pressure because it relies on equity raises, convertible offerings and upfront customer payments. SpaceX executives added that demand for AI computing remains exceptionally strong, with Elon Musk saying the company could rent out its compute several times over.
Despite the positive demand signals, CoreWeave and Nebius stocks fell roughly 3% on Wednesday. CoreWeave remains down about 27% over the past month and Nebius about 26%, as investors weigh debt-funded expansion and the risk of a future computing capacity glut.
