Berlin – A senior executive told CNBC on Wednesday that the increase in AI computing power prices has exceeded expectations. This statement, coming at a time when the business model of neocloud is under increasing scrutiny, reflects a relatively optimistic outlook.
After the borrowing costs soared for one of the largest participants in neocloud, investors became more cautious. The related developments in CoreWeave and the doubts surrounding the scale of debt used to fund data center construction have put heavy pressure on other neocloud companies such as Iren and Nebius. The stock prices of these companies have plummeted significantly over the past month.
Nebius Chief Revenue Officer Marc Boroditsky stated that the company is not in the same situation as CoreWeave, because "we do not have the same level of debt as they do."
He also said that if this AI infrastructure company brings its production capacity online in 2027, it will be sold out. He indicated that a "similar situation" could occur in 2028 as well, which supports a positive outlook for long-term demand, as various companies are competing to acquire computing power.
When asked whether he believes that the price per megawatt will continue to rise and exceed expectations, Boroditsky replied: "Yes."
Nebius is one of the new wave of companies belonging to the neocloud group. These companies are investing billions of dollars to purchase NVIDIA's graphics processors, build data centers, and then rent out this capacity.
A computing power auction was held on Tuesday, and the results showed that prices continued to rise, said the revenue manager. "We observed a continuous upward trend in the price per megawatt," he told CNBC.
The price per megawatt is a key metric for New Cloud Company, indicating how much the company can charge customers for a certain amount of computing power.
Backed by NVIDIA, AI, a company that is building data centers, and Crusoe, the CEO of AI, also holds an optimistic attitude towards pricing. He stated that the company has seen an increase in prices for GPU, including older NVIDIA chips.
Lochmiller said, "We see that the pricing of A100 is now higher than it was in 2020 or 2021. We also observe that the pricing of H100 is higher than when it was first deployed in 2023."
"The demand is very strong, and a large part of that is due to the fact that the underlying model capabilities have advanced significantly. People are now creating more value from computing infrastructure."
These remarks emerged in the debate among investors about how quickly NVIDIA GPU will lose its economic value as more powerful chips enter the market.
For AI infrastructure companies that need to recoup their investments and achieve profitability, while also investing billions of dollars in GPU, it is crucial to continue renting out old chips at attractive prices.
The statements from Lochmiller indicate that, at least for Crusoe, the rental cost of the previous generation of NVIDIA chips is higher than when they were first deployed, which could enhance the economics of their AI cloud business.
SpaceX Boost
After SpaceX announced that its AI business revenue had increased ninefold year-on-year to $7.56 billion, the stock price of Nebius rose on Wednesday. SpaceX, the chief financial officer, stated that the pricing is “currently slightly above the upper end of the $30 to $50 per watt range,” highlighting the pricing power of those who rent out computing capacity.
After cloud service providers such as CoreWeave, Iren, and Applied Digital made the aforementioned statements on Johnsen, their prices also rose during the pre-market trading on Wednesday.
"I am very excited about the performance of SpaceX. This confirms something we already know: this is a very dynamic market, where supply consistently lags far behind demand," said Boroditsky.
