The Neocloud complex have staged a massive comeback after a brutal start to 2026. But the gains are not widespread among all stocks. In today’s post, we update our thesis on the neocloud industry and highlight 4 key winners, we believe are the best positioned from a fundamental perspective.
Join us as we help hundreds of investors navigate the rapidly evolving AI innovation landscape amid a tricky Q1 earnings season, identify rock-solid businesses with strong growth trajectories & operational grit and deliver proven alpha-generating returns.
Since March, the TPO Portfolio delivered returns of 22.5%, significantly outperforming the broader indices.
Neoclouds have rapidly grown since when we first reviewed the industry last year, driven by the mad rush for compute.
Crypto miners led the charge in reprioritizing their GPU inventory towards AI & HPC workloads, following the leader CoreWeave CRWV 0.00%↑. At the same time, Nebius NBIS 0.00%↑ challenged the crypto miner industry from the outside for neocloud dominance to also address that mad rush for GPU compute. Such was the demand that the entire neocloud industry (again: the entire industry) was growing at >60% CAGR, powered by substantial multi-billion, multi-year backlog wins.
In 2026, markets no longer want to be swept off their feet by the promise of backlog growth. Markets want results. Execution. And the Q1 season for neoclouds was a teaser of what to expect from companies in the neocloud industry over the next 9-12 months.
In this post, we update our views on the neocloud market for 2026 and include our top 4 picks from a wide variety of neoclouds that include Core Scientific CORZ 0.00%↑ | Applied Digital APLD 0.00%↑ | Galaxy Digital GLXY 0.00%↑ | Cipher Mining CIFR 0.00%↑ | TeraWulf WULF 0.00%↑ | Hut8 HUT 0.00%↑ | IREN IREN 0.00%↑ | Marathon Holdings MARA 0.00%↑ | Cleanspark CLSK 0.00%↑ , in addition to CoreWeave and Nebius.
📌The TPO Portfolio has staged an impressive rally since March 1, now up 22.5% 💪, significantly beating the S&P 500 and benchmark ETFs that include QQQ QQQ 0.00%↑, GRNY GRNY 0.00%↑, IVES IVES 0.00%↑, and SPRX SPRX 0.00%↑ during this period of time.
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The Q1 earnings season showed that neoclouds have made some considerable progress at demonstrating their ability to respond to massive demand for AI compute.
Since H2 last year, a growing number of neoclouds have won large billion-dollar multi-year deals, especially from hyperscalers who remain “capacity constrained” but are challenged by the towering requirements of assembling key resources like power, land, etc. themselves.
As seen below, many neoclouds have moved quickly to secure contracted power, (i.e., the energy capacity secured/contracted from utility providers that eventually power GPUs in the ‘to-be constructed’ data center) based on filings/announcements from the Q1 earnings season.
In many cases, neoclouds were able to secure a >2x increase in contracted power versus the same period last year. Generally speaking, the rapid increase in securing contracted power illustrates the dexterity and urgency shown by neoclouds which we believe will serve them well down the road.
If Q4 last year was about scoring a substantial backlog from hyperscalers and other contract wins, Q1 was about showing how serious these companies are in addressing the demand urgency. And, securing vast amounts of contracted power was the first key step.
From this point, neoclouds have to further validate that their capital-intensive business model remains viable enough for investors to stay invested as these companies rush to build entire data centers complete with GPU capacity, ready for the ARR (annualized revenues) engine to start roaring to life. After all, it does take copious dollar volumes of capex, intense planning, and an orchestration of a multitude of resources, in addition to securing the contracted power and financing needed to bring these data centers to life in a span of a few months.
In Q1, some neoclouds were ahead of the market’s expectations. Some of these companies showed that they weren’t just securing power grids or deploying capex. Their GPUs are coming online at a faster rate, seen in their active/online GPU capacity, leading to higher ARR. In a few cases, some of these neoclouds also reported gains in operating efficiency as observed in their EBITDA—a big step up in operating performance.
The way we see it, there are 4 strategies to gain exposure to the neocloud industry as shown below, based on Q1 earnings. We’re calling them the CoreWeave Clan, The Google Guys, The Efficiency Experts, and The Leftovers.
We explain that below and highlight four winners, which we believe are well positioned to rise from the neocloud industry.
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