The Business Model
The contract is the asset. Take-or-pay commitments move utilization risk from the operator to the customer, which is what makes a fleet of chips financeable. The price of that transfer is concentration: only a handful of buyers can sign commitments large enough, and one supplier makes nearly all the chips. CoreWeave's S-1 showed Microsoft at about 62 percent of 2024 revenue; Nvidia, already a shareholder, anchored the IPO and later agreed to buy unsold capacity through April 2032. Faraday's read is that backlog should be read like a lease book, by counterparty and start date, and that supplier support moves risk rather than removing it.
Knowledge check
Why does a take-or-pay clause matter more to a neocloud than to most service businesses?
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A cluster of graphics processing units has few variable costs to cut when demand falls: the chips are bought, the lease runs and interest is due. Take-or-pay obliges the customer to pay whether or not it uses the capacity, so utilization risk moves to the customer. That certainty is what lenders finance against.