Elice shares fall more than 30% in South Korean debut — CNBC

Shares of South Korean cloud provider Elice Group fell by more than 30% in their market debut. This intensified negative sentiment toward companies that provide computing capacity for artificial intelligence systems, CNBC reports.

Pressure on US technology stocks

The decline of Elice Group also affected premarket trading in shares of US technology companies. As of 8:08 a.m. Eastern Time, CoreWeave shares were down 4%. Nebius and Iren shares were losing about 5%, while Vertiv was down 2%.

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CNBC notes that Elice Group was compared with the US company CoreWeave, which operates in cloud computing. Investors are increasingly cautious in their assessment of AI-focused capacity providers due to concerns about an oversupply of computing infrastructure.

HSBC assessment

HSBC analyst Abhishek Shukla said in a Monday note that the problems of CoreWeave, which has a significant debt burden, are not going away. In his assessment, difficulties in the debt market and more moderate growth in revenue from large language models are increasing structural risks for such cloud companies. HSBC has a reduce rating on CoreWeave shares and set a price target of $39, implying a potential decline of 36.5%.