Neocloud firms often finance themselves by signing long-term lease contracts with major tech customers who need quick access to computing power.

Firms can then borrow money using those contracts – plus the AI chips they purchase – as collateral, explained analyst Cory Johnson of "The Quiet Period" IPO research outfit.

He said debt is common across neocloud firms because the hardware has to be paid for up front.

Take the industry leader: CoreWeave. It's a fraction of the size of some of the Big Tech companies it serves.

But Johnson believes lenders sometimes consider the creditworthiness of CoreWeave's customers, like Microsoft or Meta, more than the company's when they lend.

"This helps explain how CoreWeave accumulated $35.1bn (£26.3bn) in debt," he said.

Some jittery investors appear to be having second thoughts.

CoreWeave stock has lost a quarter of its value over the past month, and it's not alone.

Shares in other neocloud firms like Nebius, IREN, and Applied Digital have all shed about that much…