Rothschild Flags Cyclically Inflated AI Valuations, Issues 'Sell' Ratings

Rothschild & Co. Redburn has taken a more cautious stance on AI infrastructure stocks, issuing 'Sell' ratings for CoreWeave (CRWV) and Nebius (NBIS). The firm believes credit markets are pricing in risks that equities largely ignore.

The warning comes as hyperscalers have more economic leverage once off-balance-sheet commitments are included. Rothschild stated this could limit their ability to fund the next phase of massive AI infrastructure buildout, specifically for companies transitioning from Bitcoin mining into AI and high-performance computing.

Credit markets send a different signal than the 'firmly bullish' equity narrative around generative AI infrastructure. Companies with direct exposure to the neocloud model face greater valuation concerns. Traditional real estate investment trusts could benefit indirectly from continued data center construction.