Wells Fargo keeps Applied Digital, TeraWulf, Hut 8 as top AI/HPC picks

Wells Fargo's Tuesday earnings preview keeps its Overweight ratings on five AI and HPC data-center operators: Applied Digital, TeraWulf, Hut 8, Cipher and Core Scientific. The bank named Applied Digital, TeraWulf and Hut 8 its top picks and projected the sector will seek more than $20 billion in secured debt over the next few quarters. Against recent closes, its targets imply 97% upside for Applied Digital, 100% for TeraWulf, 90% for Hut 8, 61% for Cipher and 68% for Core Scientific.

The financing picture differs by operator. Analysts Eric Luebchow, Caleb Stein and Amy Hong estimate Applied Digital needs about $8 billion in secured financing at an 80% loan-to-cost ratio, Core Scientific about $5 billion for its AMD-related lease, and TeraWulf $3.5 billion to $4 billion for Anthropic. Cipher has fully funded its initial three tenant leases, and Hut 8's nearly $9 billion of available liquidity gives it flexibility over when to finance Beacon Point Phase 2. Wells Fargo forecasts nearly 300 MW of Q3 deliveries and $272 million of base HPC colocation revenue across the five operators, reaching roughly $1.2 billion quarterly by Q4 2027, while warning that fit-out and start-up costs could make near-term results uneven.

The stakes appear to hinge on lease signings and on when that debt gets raised. Wells Fargo sees potential Q4 lease signings for 250 MW of critical IT expansions with Oracle and Meta at Applied Digital, and a 400 MW first-phase Muskie lease for TeraWulf by Q1 2027. TeraWulf said Muskie's initial utility-power phase is targeted to begin ramping in 2028, so a key test is whether those agreements and the financing behind them arrive on that timeline; a slip could weigh on the upside its targets imply, while investors holding these operators may see near-term results stay uneven.