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Neocloud stocks are making an impressive comeback in overnight trading, with CoreWeave (NASDAQ:CRWV) surging 15%, Nebius (NASDAQ:NBIS) climbing 10.5%, and IREN (NASDAQ:IREN) gaining 6%. The rally follows encouraging quarterly results from CoreWeave, offering reassurance that soaring infrastructure costs and mounting debt have yet to derail the industry's growth prospects.

Investors have spent recent weeks worrying about whether neocloud providers can finance their expensive expansion plans without running into financial trouble. CoreWeave's latest performance suggests customer demand remains strong, although widening losses and rising interest expenses continue to raise concerns about financing its expansion plans.

Looking ahead, Wall Street's price targets suggest substantial potential upside for all three stocks.

CoreWeave's Earnings Give Investors Reasons to Cheer

CoreWeave reported third-quarter revenue of $3.66 billion, representing 168% annual growth, while its contracted backlog reached $132.5 billion. The company also raised its full-year sales forecast to between $13 billion and $13.3 billion, providing further evidence that customers continue spending heavily on AI computing capacity.

The results follow a turbulent month marked by growing concerns about CoreWeave's financial obligations. Its debt reached $46.9 billion at September's end, although the company expects about $9 billion in customer prepayments and deposits over the coming three months. CEO Michael Intrator also indicated that potential regulatory changes following the midterm elections should have little impact on planned expansion projects.

Meanwhile, Wall Street's expectations suggest CoreWeave could have a long way to climb, with analysts' average 12-month price target of $122.04 indicating 150% upside from Tuesday's closing price. Based on 20 Buys, 5 Holds, and 3 Sells, the stock commands a Moderate Buy consensus rating. (See CRWV stock forecast)

Nebius Faces an Important Earnings Test

Nebius is also benefiting from the improved sentiment surrounding CoreWeave, although another important test is approaching. The company will release third-quarter earnings on November 12, giving investors an opportunity to evaluate whether demand for computing resources can justify its extensive investment requirements.

Recent developments have provided reasons for confidence in the company's longer-term growth prospects. In October, Nebius secured a $3.5 billion financing facility from Citi to support data-center construction and GPU purchases. The provider also disclosed more than $40 billion in long-term customer commitments, potentially strengthening its ability to secure additional funding.

Nevertheless, construction expenses and possible restrictions on new facilities remain serious concerns for investors. Analysts will be watching the upcoming announcement for evidence that Nebius can convert those contracts into revenue without accumulating excessive financial obligations.

How much higher could Nebius climb if Wall Street's predictions prove accurate over the coming year? The average 12-month price target of $296.73 implies about 121% upside from Tuesday's closing price. Among 13 analysts, 9 recommend Buy, 3 stay on the sidelines, and one advises Sell, resulting in a Moderate Buy consensus rating. (See NBIS stock forecast)

IREN's AI Cloud Expansion Gains Ground

IREN has already delivered an encouraging update of its own following its latest quarterly announcement. Last Thursday, the company reported fiscal first-quarter revenue of $228 million, representing 66% sequential growth. Its AI cloud operations contributed $200 million, nearly tripling from the previous period, while contracted backlog increased to $20.3 billion.

The provider has also been securing more favorable customer agreements, including a five-year contract involving substantial upfront payments. Under those terms, the client will prepay 90% of associated GPU capital expenditures, potentially reducing reliance on external financing. Meanwhile, IREN's annual recurring revenue target exceeding $4 billion is fully contracted and funded.

There is one complication, however, concerning the timetable for reaching that anticipated revenue milestone. IREN has moved its target from December 2026 to January 2027, with a possible extension into February. The adjustment reflects customer-requested design changes and supplier timing, reminding investors that converting contracts into operational capacity can take longer than expected.

Overall, Wall Street sees the greatest potential gains in IREN among the three neocloud stocks discussed here; analysts' average 12-month price target of $56.50 suggests 186% upside. Based on 8 Buy recommendations and 3 Holds, IREN receives a Moderate Buy consensus rating. (See IREN stock forecast)