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Wells Fargo initiates Applied Digital with Overweight and $50 target
The bank’s view centers on signed take-or-pay data center leases totaling about 1.4 gigawatts under contract, which it values at roughly $36 billion in base-term value.
Wells Fargo began coverage of Applied Digital Corporation on Sept. 17 with an Overweight rating and a $50 price target, positioning the company as a top idea, according to Yahoo Finance. The note said Applied Digital’s momentum is driven by leases already signed, not on future demand.
Wells Fargo estimates Applied Digital has roughly 1.4 gigawatts under contract for data centers serving AI companies, with more than 70% of the contracted megawatts tied directly to Meta and Oracle. The bank puts the base-term value of those leases at about $36 billion, and it said renewals could raise the figure to beyond $86 billion over three decades.
The investment thesis is also built around the structure of take-or-pay agreements, which require tenants to pay whether or not they use capacity. Wells Fargo described the backlog as investment-grade and creditworthy, and argued that grid access, not capital, is the scarce input for AI data centers, noting that Applied Digital secured power allocations early.
Wells Fargo valued the existing contracted leases at about $30 per share on a net present value basis, while the stock closed at $24.39 the day before the call. The analysis highlighted that on its model, the signed leases imply the unbuilt pipeline has limited value until it becomes contracted, with the company funding construction through other capital sources, including a preferred equity facility of up to $5 billion from Macquarie Asset Management.