Musk Is Predicting Guppy-level Death for Scores of A.I. Companies

ImageAndrew here.Just in: Apollo Global Management is said to be nearing a deal to buy a nearly 10 percent stake in Mubadala Capital, the asset management arm of Abu Dhabi’s sovereign wealth fund and the majority owner of Fortress Investment Group, CNBC reports, citing unnamed sources.Elon Musk was busy this weekend.

He warned that interest rate increases were going to crush independent data centers, which is already rattling neocloud stocks.Plus, the top law firm Weil Gotshal & Manges is dealing with a messy wave of defections that has people wondering what’s next for it.

More below.A.I.’s shakeoutConcerns about rampant artificial intelligence spending have slowed the stock market rally and driven up tech companies’ borrowing costs.

Now Elon Musk predicts that many companies tied to the A.I.boom will not survive, as they’ve been effectively shut out of the debt market.The ominous remarks on social media have come as investors brace for a major test this week.

More hyperscalers’ earnings are on tap, and details on Anthropic’s upcoming I.P.O.may be, too.Could a looming credit bottleneck wipe out a slew of tech companies? Musk thinks so.

But he said his $2 trillion company, SpaceX, was well cushioned thanks to its investment-grade credit status and booming Starlink internet business.He underscored that point on Sunday by announcing that SpaceX had just landed a $40 billion debt deal to buy more chips, including from Nvidia.But that may not be final.Who’s at risk? Musk singled out neoclouds, the companies that sell computing power to A.I.

companies.Many of them, he wrote on social media, face “guppy-level death and consolidation.”Bears may seize on Musk’s warning.

Nasdaq futures point to a modest rebound on Monday, but investors have punished neoclouds lately.For example, shares in CoreWeave, which counts Anthropic and Microsoft as customers, were sold off sharply last week and are down again in premarket trading.

CoreWeave’s credit ...