Wells Fargo Starts Applied Digital at Overweight, Calls It a Top Idea

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Wells Fargo initiated coverage of Applied Digital Corporation on September 17 with an Overweight rating and a $50 price target, naming the data centre developer a Top Idea. Analyst Eric Luebchow values the roughly 1.4 gigawatts of contracted leases at about $30 a share on a net present value basis, against a pre-call close of $24.39, implying the signed book alone exceeds the share price and the unbuilt pipeline is valued at close to nothing. Wells Fargo puts the base-term value of those take-or-pay leases at about $36 billion, with renewals potentially taking that beyond $86 billion across three decades, and notes more than 70% of contracted megawatts sit directly with Meta and Oracle. The bank argues grid access rather than capital is the scarce input and that Applied Digital secured its utility allocations early, though the backlog pays nothing until built and is funded by up to $5 billion in preferred equity from Macquarie Asset Management drawn in tranches. Risks include concentration in three tenants, with the CoreWeave lease the weakest link despite Meta credit support, and the gap between contracted and delivered capacity ahead of the fiscal first-quarter report in mid-October.

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