This neocloud may have a silver lining

Data: Tradeweb; Chart: Axios/Matt Phillips Goldman Sachs has raised its rating on the shares of CoreWeave to a "buy" recommendation after a brutal week for the data center operator.Why it matters: That view may come as a surprise given that the tumble in CoreWeave bonds and stock last week had appeared to encapsulate all what markets fear about the debt-dependent AI boom: too much money, most of it borrowed, chasing returns that may prove elusive. Zoom out: What's cloudy (sorry!) about the outlook for CoreWeave and the other data center operators known as neoclouds, as well as their much bigger rivals, the hyperscalers, is that nobody really knows how profitable all these data centers will eventually be. But if the cost of borrowing to build them goes up — which is what the spike in CoreWeave's bond yields suggests — that should make them less profitable. The latest: Goldman analyst Gabriela Borges argued in a note Monday that the increase in borrowing costs that CoreWeave ultimately faces will be less substantial than the company's yippy bond yields might suggest. What they're saying: "Our discussions suggest that CoreWeave's unsecured spreads (currently at 13.5-15.0%) are not re…

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