A once-obscure corner of the AI ecosystem finds itself in the spotlight – and investors don't all like what they see.

Names like CoreWeave and Nebius are familiar to the tech set in San Francisco and Silicon Valley.

These data centre companies, known as neocloud firms, run large warehouses packed with expensive computers, which they lease to major AI developers like Anthropic, OpenAI and Meta.

They're now the subject of one of Silicon Valley's most heated debates.

Many question whether neocloud firms are financially sound and what their recent stumbles tell us about the state of the AI economy.

Analysts at Gartner predict by 2030, 80% of neocloud firms will "cease independent operations", while Forrester's experts expect at least three of them to be imminently acquired "as finances get shaky".

On Thursday, Treasury Secretary Scott Bessent tried to downplay recent concerns about neocloud firms, calling them " a small component of the overall ecosystem , external " on CNBC.

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 if not more during the same period.

Debt investors also appear spooked, and are demanding ever-higher returns from several firms in the sector.

CoreWeave's CEO Mike Intrator has said that the market is acting "irrationally" and has expressed confidence in its business model. Some of the world's most consequential companies are queuing up for CoreWeave's infrastructure and other AI services.

Several neocloud firms have their roots in the volatile crypto mining industry, made of companies that generate cryptocurrencies, like Bitcoin.

Crypto miners use some of the same kind of physical infrastructure that is used to develop AI.

CoreWeave was founded in 2017 with a focus on mining Ethereum.

IREN, Core Scientific and Applied Digital also started in crypto mining.

Their infrastructure left them well-positioned when AI exploded in 2022 with the introduction of OpenAI's ChatGPT.

One outlier is Nebius, which was known as Yandex NV when it was part of Russia's version of Google before splitting off and changing its name in 2024.

Now, the success of these firms hinges on the fate of major AI developers and hyperscalers – even larger data centre operators which neocloud firms often count as key customers.

"There is just an enormous amount of spending getting injected into the system," said Melissa Otto, head of Visible Alpha Research at S&P Global. "It's an arms race."

But the trade-off of their model is "greater financial risk" in the face of change, said Forrester VP and principal analyst Charlie Dai.

That includes any adjustments that their Big Tech customers might make to their spending plans.

This past week, when Microsoft and Google forecast less AI spending than Wall Street analysts had projected, shares in several neocloud firms tumbled.

Much is also riding on Anthropic and OpenAI, which are both expected to start selling shares to the public in the months ahead.

If AI proves to be a bubble – and bursts – neocloud firms "are definitely going to face collateral damage," said Bradley Tusk of Tusk Ventures.

The future of the neoclouds also depend on their ability to keep borrowing, which gets more expensive as interest rates rise.

In a recent social media post, Elon Musk suggested this challenge could lead more than 200 neoclouds to "see guppy-level death and consolidation", with the smallest firms being the most vulnerable.

"Some will make it through, but not many," he added.

For now, analysts at Yorkville Ives said demand for computing power still exceeds supply, adding that neoclouds are filling an important gap that larger data centre companies cannot fill.

But to some, the neocloud sector's recent wobbles are concerning.

Microsoft recently cancelled a deal with a British neocloud outfit called Nscale amid power supply issues which could last through to 2030.

Australia's Firmus just shelved plans to start selling shares to the public.

These developments come amid a public backlash against data centres and questions about how much value AI can add to worker productivity.

Big, noisy and coming to a town near you - why the data centre backlash is growing

A backlash over data centres is another threat to the AI juggernaut

Thousands of Virgin Media O2 staff face redundancy risk as the telecoms firm looks to save money in the face of billions of pounds of debt and tougher competition.

The broadband provider has not finalised the number of roles to be cut but it is likely be a sizeable chunk of its 16,000 workforce, the BBC understands.

VMO2 has billions of debt on its balance sheet and is tackling competition from both smaller providers as well as giants like BT, which has agreed a deal to acquire rival TalkTalk, a move which VMO2 has firmly opposed.

VMO2 declined to comment. The Prospect union, which represents VMO2 staff, said the cuts were "disappointing and very unsettling".

Deputy general secretary Noel McClean said it is "committed to supporting our members through what is a difficult time, as well as also working with employers to explore ways to mitigate the number of redundancies and ensure retraining and redeployment of staff affected".

The majority of the affected staff will be in non-customer facing roles and a number of senior leadership changes are already under way, the BBC has been told.

VMO2 is also expected to review its use of contractors and suppliers in conjunction with the job cuts that were first reported by Sky News.

As of 30 June, VMO2's total debt stands at £27.2bn while it holds assets worth £45.9bn, according to the firm's latest accounts.

Meanwhile, the company is dealing with fierce competition from cheaper "altnets" like Hyperoptic, Community Fibre, Gigaclear, and YouFibre.

VMO2's had attempted to respond to this growing threat by buying altnet competitor Netomnia for £2bn via nexfibre, a joint venture owned by VMO2's owners.

However, the Competition Markets Authority (CMA) has provisionally found competition concerns in the deal , external , with a final decision to come in December, sparking anger from VMO2.

At the time, VMO2 called the BT takeover a "stitch-up", which allowed its rival "tighten its grip" over the market.

BT said its deal provided "a safety net" for TalkTalk customers as their broadband provider faced collapse without the takeover.

On Friday, BT's share price jumped 7% after the Financial Times reported VMO2 was close to agreeing a deal , external to use its rival's fibre broadband network.

VMO2 was minded to go ahead with the plans after halting upgrades and expansion of its own infrastructure to ease concerns over its debt pile, the paper reported.

The BBC has been told the deal is very close and that VMO2 is highly likely to announce it will stop all investment in fibre in its results on Tuesday.

BT agrees rescue deal to buy broadband operator TalkTalk

There is no end in sight for the drivers of illegal mining, while police action appears ineffective

C ora Bailey has been encountering illegal miners ever since she first started treating injured animals in the townships around Roodepoort, west of Johannesburg, in 1991. But as the price of gold has soared, so too has activity in the abandoned mine shafts that mark the area.

In late September, dozens of zama zamas – the name given to illegal miners in South Africa , meaning roughly "to take a chance" in Zulu – arrived to dig for gold across the dirt road from her charity, Claw (Community Led Animal Welfare).

Soon, they were taking water for their panning and processing from the organisation's two 25,000-litre water tanks, which are filled irregularly by the city government for the 100 or so rescued and injured animals on site.

"We've asked them really nicely and haven't ever refused them water to drink … But, for the first time ever, we closed the gate at 12 [midday], because we literally had about two buckets of water left," Bailey said in mid-October.

Police told her that the scale of the illegal mining was too big for them to do anything about, she said at the time. About a week later, officers sheared away the grass that had partly hidden the zama zamas . But within a few days a smaller group had returned, although Bailey said they were now taking Claw's water only for drinking.

South Africa's police regularly trumpet their success in tackling illegal mining. On 19 October, they said they had arrested 71 suspected zama zamas across the country in the previous week.

However, researchers put the number of illegal miners in the tens of thousands. In 2019, Marcena Hunter, a researcher at the Global Initiative against Transnational Organised Crime, estimated that a tenth of South Africa's gold production , worth about $1bn, was being exported illegally .

Police operations have also led to tragedy. In 2025, 93 bodies were pulled from a mine shaft in Stilfontein , after officers blocked food and water from being delivered underground.

Meanwhile, there is no end in sight to the dynamics driving illegal mining, including the high price of gold, poverty, unemployment, corrupt politicians and police profiting, and the failure of mining companies to fulfil their legal obligation to seal mining shafts when they cease operating.

South Africa's modern history is tied to mining. In 1884, gold was found on a farm, sparking a gold rush that led to the creation of Johannesburg. Gold production peaked in the 1970s , but South Africa was the world's largest producer, a title it held for more than a century, until 2007.

In 2009, Morris Viljoen, a geology professor at the University of the Witwatersrand, estimated that the reef that gave the university its name had produced more than a third of the gold ever mined globally. Claw is housed in the old offices of the Durban Deep mine, which shut at the turn of the century, having once lent its name to an Elton John song .

The city government claims there is still 40,000 tonnes of gold underground in the region. But, with the remainder lying ever deeper, the costs of recovering it have risen.

Mining companies are supposed to seal up old mine shafts and rehabilitate the environment around them. However, in 2025 there were "6,100 derelict and ownerless mines and 1,170 unsafe mine openings", the mining minister, Gwede Mantashe, said in response to a parliamentary question.

Zama zamas have stepped into those voids left in the earth. While there is no comprehensive data on them, experts agree that a majority are from neighbouring countries, principally Lesotho, Mozambique and Zimbabwe.

The skyline south of Johannesburg is punctuated by the pale yellow ridges of mine dumps. Increasingly, the ground is also caving open.

For politicians seeking votes in local elections on 4 November, the culprit is clear: illegal miners. In May, Kenny Kunene, the Johannesburg council member responsible for transport, took journalists on a tour of sinkholes that he claimed were the fault of zama zamas , including a section of Wemmer Pan Road that had completely collapsed .

The road was once the main artery linking the city's central business district to the south-eastern suburbs. In one section it has completely disappeared, now raw earth pitted with the holes where illegal miners have been digging.

However, when it comes to sinkholes, experts say zama zamas are being scapegoated.

Rosalind Morris, an anthropology professor at Columbia University, who has worked extensively with illegal miners, noted that the porous dolomitic rock to Johannesburg's south and west becomes unstable when water is removed.

"The biggest culprit of sinkholes in South Africa is formal industrial mining, which dewaters at a scale of hundreds of millions of gallons of water removed from underground every day," she said.

"There are areas where there is a lot of residual gold, which are being very intensely mined by zama zamas , and some of that definitely causes structural collapse, there's no doubt about it. But the idea that this was invented or caused for the first time by zama zamas is completely fallacious."

Zama zamas are also frequently blamed for violence in mining areas, including a September mass shooting in Wedela township, west of Johannesburg. However, David van Wyk, the lead researcher at Bench Marks Foundation, said culpability laid with the often-feuding gangs that controlled access to the shafts.

"The guys working in the mine are actually super-exploited cheap labour … The guys with the guns are the guys who take the gold," he said. "They don't go underground."

In Khutsong, about 50 miles (80km) west of Johannesburg, illegal miners, local and foreign, kept the township afloat, said Vusi Cele, the youth secretary for the local branch of Mining Affected Communities United in Action, a campaign group that advocates for "artisanal miners" to be granted mining licences. "Without those rents, it's a ghost town," he said.

While Cele, 33, currently hustles above ground selling mobile phone covers and screen protectors, he said he too would mine if he could get a licence. "On the surface there's peanuts," he said. "Underground there's money."

At just 14, Zhang Shaoqing's prowess with AI tools means he could easily be included in the ranks of the new wave of "super students" but it's a description he balks at.

"Daring to imagine and daring to try is encouraging, but it's also a kind of pressure; it's as if I'm not a good student unless I've built something," said the ninth-grader at Wuxi Dipont School of Arts and Science in Jiangsu province.

"I don't want to be defined as a 'super student.' I would rather be seen as an ordinary student who has stayed passionate about one field for a long time," he added.

His mother Liu Liwei, who has encouraged his development and interests, is also uncomfortable with the super student label, which has recently gained online traction.

Many youngsters involved in sophisticated technology projects are not necessarily way ahead of others, but have benefited from opportunities, guidance and supportive environments, she said. "I always remind him not to think he is better than others. He has simply received opportunities that many students may not have had," said Liu.

From developing artificial intelligence tools for schools to creating digital content, a growing number of Chinese teenagers are moving from technology users to creators, offering a glimpse into how they are exploring opportunities and challenges in the AI era.

In recent years, Chinese school students have begun participating in AI competitions, open-source communities and industry-linked innovation programs once mainly associated with university students and professionals.

Tencent Youth Tech Training Camp, launched in 2016, has attracted more than 900,000 users to its platform, partnered with over 2,000 schools and accumulated more than 40,000 works as of September 2026.

Dong Xinye, deputy director of the Youth Innovation Education Center at Shenzhen InnoX Academy, an education program that aims to nurture innovative talent for the AI era through project-based learning, said teenagers' participation in AI and innovation programs has grown significantly in recent years.

"What was once a niche interest among a small number of technology enthusiasts has gradually become a mainstream way for young people to explore the world," said Dong.