Rothschild & Co. Redburn Initiates CoreWeave and Nebius at Sell, Flags Cyclical Overvaluation
Rothschild & Co. Redburn, an independent research arm of the Rothschild group, initiated coverage of AI cloud infrastructure companies on Monday with sell ratings on CoreWeave and Nebius. The firm also assigned neutral ratings to six companies transitioning from bitcoin mining to AI infrastructure: Core Scientific, TeraWulf, Applied Digital, Cipher Mining, Hut 8 and IREN.
In its first report on the sector, Redburn said earnings and valuations at newer cloud providers look “cyclically inflated.” It argued that Nebius shares already reflect the most optimistic outcome of an ongoing repricing of compute economics, leaving the stock with significant downside risk, while CoreWeave's risk-reward profile remains insufficiently attractive.
The research house also pointed to signals from credit markets, saying hyperscalers' effective economic leverage is higher once off-balance-sheet commitments are included, which could constrain their ability to fund the next phase of large-scale AI data center buildouts. Investor Michael Burry has estimated that Amazon, Meta, Alphabet, Microsoft and Oracle hold more than $3 trillion in off-balance-sheet commitments, including leases, purchase obligations and special purpose entity exposures; the figure aggregates multi-year commitments and does not represent realized losses.
The bearish calls did not immediately pressure market sentiment. On Monday, Nebius rose 4.14% and CoreWeave gained 5%, with retail sentiment in both stocks in “bullish” territory. Nebius had announced on September 17 that it would raise prices for some on-demand GPU instances by about 20% from October 1, its second increase in three months.
Redburn said competition in the AI inference era will increasingly hinge on order quality, prepayment structures, utilization rates and capital returns after hardware refresh and financing costs. CoreWeave reported second-quarter revenue of $2.575 billion and net interest expense of $640 million, underscoring financing costs as a key variable for profitability.
