Business & Finance
Data center stocks slide as Korea IPO plunges 30%, pressuring tech sentiment
Key Points
Data center stocks struggled Tuesday following a lackluster initial public offering overnight from a South Korean cloud company that has been compared to U.S. neocloud CoreWeave. Shares of Elice dropped more than 30% during their market debut overnight, as investors grow increasingly wary of artificial intelligence-dedicated computing power providers amid concerns about overcapacity. The bearish sentiment spilled into U.S. tech equities.
Data center stocks struggled Tuesday following a lackluster initial public offering overnight from a South Korean cloud company that has been compared to U.S. neocloud CoreWeave.
Shares of Elice dropped more than 30% during their market debut overnight, as investors grow increasingly wary of artificial intelligence-dedicated computing power providers amid concerns about overcapacity.
The bearish sentiment spilled into U.S. tech equities. CoreWeave shares lost 4% in premarket trading as of 8:08 a.m. ET. Nebius shed about 5% along with Iren. Vertiv pulled back 2%.
HSBC said in a Monday note that the troubles for the heavily levered CoreWeave are not going away.
"Debt market woes and moderating LLM revenues are exacerbating structural concerns for neoclouds," HSBC analyst Abhishek Shukla wrote. Shukla has a reduce rating on CoreWeave with a price target of $39, implying 36.5% downside.