Cantor AI Infrastructure: 'We continue to view the selloff as a significant overreaction' - $Cipher Digital(CIFR.US) $Ri…

Cantor AI Infrastructure: 'We continue to view the selloff as a significant overreaction' - $Cipher Digital(CIFR.US) $Riot Platforms(RIOT.US) $Hut 8 Mining(HUT.US) $Core Scientific, Inc.(CORZ.US) $Keel Infrastructure(KEEL.US) $IREN(IREN.US) $Terawulf(WULF.US) $Nebius(NBIS.US) $Coreweave(CRWV.US)

Another bloody week for AI infrastructure, with Thursday the worst day and a slight recovery on Friday. Our coverage finished down an average of 9.7% w/w, compared with declines of 5.0% for QQQ and 12.1% for SOX.

Three overlapping concerns drove the selloff: the availability and cost of AI funding, the viability of neoclouds given their reliance on hyperscalers and AI labs, and access to power, heightened by emphatic midterm results. The midterms delivered a blue wave, and in Texas, Gina Hinojosa defeated Greg Abbott to become the first Democratic governor since 1990. She has called for a pause on data center permits and approvals until the legislature passes community protections.

In our view, the contracted and energized base is unaffected, and the impact is a slower, more selective pipeline that favors operators with signed interconnection agreements and investment-grade tenants in place. The funding fear showed up elsewhere as well. Bloomberg reported that MSFT (OW, Blakey) is tightening oversight of some neocloud projects, and Apollo (APO, NC) said on its 3Q call that it will take a more defensive approach to AI investments with a focus on secured and senior debt. Management at Apollo also described a plan to position defensively and prepare to play offense, which implies capital remains available at the right price.

We also heard from CIFR, RIOT, HUT, CORZ, KEEL, IREN, and WULF. RIOT announced a 15 year, $28bn TCV lease for 910 MW at Corsicana, while IREN beat on the numbers but pushed its target of $4bn+ of contracted ARR operational from YE26 to as late as February. We continue to view the selloff as a significant overreaction, especially for operators with signed leases and permits in hand, as the contracted and energized base is unaffected by the midterms and demand for compute continues to exceed supply.