Major neocloud stocks traded lower on Monday after Elon Musk, chief executive of SpaceX and Tesla, said that more than 200 neocloud companies will face a "guppy-style extinction" and that the industry is heading toward large-scale consolidation.

Shares of NEBIUS (NBIS), CoreWeave, Inc. (CRWV), and IREN Ltd (IREN) each fell more than 4% in premarket trading on Monday.

The sector was already weighed down by investor concerns that companies are expanding through debt-driven spending on artificial intelligence infrastructure without certainty that the buildout will generate long-term returns, adding further pressure to share prices.

Musk posted on X on Sunday that "over the past few weeks, debt markets have essentially cut off financing for companies with no meaningful revenue other than AI data centers."

"This means more than 200 neocloud vendors will face a guppy-style extinction and industry consolidation. A few will survive, but not many," he added.