Founder’s Note: Sometimes it strikes me that Sam Gatlin is literally just a kid from Kansas.
Then I read his stuff, and I’m struck by the fact that we have one of the brightest young minds in the game on our side.
Here’s Sam with more good information about what’s happening across the current market landscape… – JC
By Sam Gatlin
Many investors still think the AI trade is just about Nvidia (NVDA), but they’re wrong.
Right now, we’re seeing new leadership emerge, and capital is rotating into new names.
One theme that has my attention right now is the neocloud industry, which my good friend Ricardo Sarraf brought to my attention earlier this week.
These companies are building the digital backbone for artificial intelligence.
Data centers, high-performance computing, cloud infrastructure, and power-intensive server capacity are the plumbing of the AI revolution.
And demand for it is exploding…
At the same time, the geopolitical backdrop keeps getting more intense.
This week, President Donald Trump and Chairman Xi Jinping met to discuss trade, technology, and economic cooperation, while both countries remain locked in a much larger competition beneath the surface.
The U.S. and China are in a race to dominate artificial intelligence, and neither side appears interested in slowing down.
That matters because these neocloud companies sit directly in the middle of that battle.
And the charts are starting to reflect it.
American Neoclouds Are Already Breaking Out
Our basket of American neocloud stocks includes Applied Digital (APLD), IREN (IREN), Cipher Digital (CIFR), TeraWulf (WULF), and Hut 8 (HUT).
This group boasts one of the strongest primary uptrends anywhere in the market.
After rallying roughly 730% in just six months last year, these stocks spent the better part of late 2025 and early 2026 consolidating those gains.
Since then, the price has carved out a launchpad for a fresh leg higher, which appears to be underway.
And when you look beneath the surface, it becomes pretty obvious why investors keep piling into this space.
All of these companies are rapidly scaling their operations and becoming critical infrastructure providers for the AI economy.
Take Hut 8, for example…
The company grew revenue by 226% YoY, and its gross margin expanded to 64%.
What’s more, institutional ownership increased from under 10% to over 70% last year as the stock rallied 10x.
American neocloud stocks are among the hottest growth stories in the market, and institutional investors are tripping over themselves to get in on the action.
But the U.S. stock market isn’t the only one with exposure to this theme.
The Chinese neocloud stocks have also been huge winners during this bull market, and…
China Looks Ready To Follow
Our equal-weight basket of Chinese neocloud stocks includes Kingsoft Cloud (KC), GDS Holdings (GDS), and VNET (VNET).
And this group rallied more than 830% in one year before peaking in early 2025.
Since then, price has been consolidating, and it’s now attempting to break out and follow its American counterparts higher:
And fundamentally, that makes perfect sense.
China is investing enormous amounts of capital into AI infrastructure because it understands what’s at stake.
Artificial intelligence is an economic arms race, and cloud infrastructure sits at its center.
Training large language models requires extraordinary amounts of compute power, energy, networking, and storage capacity.
That demand is not going away anytime soon, and neither is the competition between the U.S. and China.
So while investors continue debating tariffs and politics, the market keeps rewarding the companies building the infrastructure both superpowers desperately need.
That’s the real story here.
At TrendLabs, we’ve been all over this trend since the beginning.
Back in late 2025, we booked roughly a 45% gain in Cipher Digital (CIFR) in less than one month as these stocks were red hot.
And based on today’s setup, this story looks far from over.
Stay sharp,
Sam Gatlin
Analyst, TrendLabs