Wall Street Just Invented the ‘Neocloud’ ETF. It Owns the Companies Renting AI Compute to Everyone Else

David Beren

Tue, August 25, 2026 at 10:34 PM GMT+3 5 min read

Quick Read

CoreWeave anchors the new Neocloud ETF with a $104 billion backlog and 112% revenue growth, delivering direct AI compute exposure that QQQ dilutes.
Applied Digital holds $36 billion in contracted leases backed 76% by investment-grade hyperscalers, and TeraWulf signed a 20-year, $19 billion deal with Anthropic.
CoreWeave and Nebius each shed roughly 20% in a single week, and CoreWeave's interest expense more than doubled to $640 million in one quarter.
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Invesco QQQ Trust (NASDAQ:QQQ) offers AI exposure through the customers rather than the suppliers. QQQ's top holdings are the hyperscalers spending on AI infrastructure. That has worked, but QQQ dilutes the pure AI-compute rental trade through hundreds of billions in unrelated market cap. On August 6, 2026, Wall Street launched the first ETF built to isolate that trade: a "Neocloud" fund holding the companies renting AI compute back to those same hyperscalers. It landed the same day as a sister photonics and optics ETF, which carries a 0.65% management fee. The question is whether the trade justifies moving away from QQQ.

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What Broad AI Funds Actually Give You

QQQ's AI thesis is second-order. Its megacap holdings sell chips, rent cloud services, and build models, but AI sits inside diversified businesses generating cash from unrelated products. Neocloud names are 100% AI infrastructure, contracted years out, and financed against those contracts. If hyperscaler capex doubles again, QQQ moves modestly. The Neocloud basket moves with it directly.

Names Inside the New ETF

CoreWeave (NASDAQ:CRWV) is the anchor. Q2 revenue hit $2.6 billion, up 112% year over year, with a revenue backlog of $104 billion and more than $25 billion in net new customer commitments added early in Q3. Adjusted EBITDA margin was 59%. CEO Michael Intrator described it as an inflection point where "scale began to translate into expanding operating leverage."

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Nebius Group (NASDAQ:NBIS) grew revenue 454% to $582 million, with a first-ever capacity auction clearing 15% above its highest prior Blackwell price. Applied Digital (NASDAQ:APLD) sits on $36 billion of total contracted lease value, with roughly 76% tied to investment-grade hyperscalers. TeraWulf (NASDAQ:WULF) signed a 20-year, roughly $19 billion lease with Anthropic for 401 megawatts at its Kentucky campus. IREN inked a five-year, $3.4 billion AI Cloud contract with NVIDIA tied to the eventual deployment of 600,000 GPUs. Lumentum is the optics arm: fiscal Q4 revenue jumped 109% to $1.01 billion, with non-GAAP operating margin at 36.6%.

Where This Basket Actually Wins Against QQQ

This is concentration by design, and that is the whole point. QQQ gives you fractional exposure to companies where AI revenue is still buried inside much broader businesses. The neocloud basket, on the other hand, is contracted forward in a big way, with $104 billion at CoreWeave, roughly $37.5 billion at Nebius, and $33 billion at TeraWulf. Every additional dollar of hyperscaler capex, which Applied Digital's Wes Cummins recently pegged at "nearly $700 billion," up from around $400 billion, flows straight into the companies that have the power, the sites, and the GPU allocations to absorb it. QQQ catches a sliver of that action. The Neocloud ETF captures the bulk of it.

Tradeoffs Worth Naming

In the last week alone, CoreWeave fell 18.63%, and Nebius fell 21.55%. CoreWeave's Q2 interest expense reached $640 million, versus $267 million a year earlier. TeraWulf posted a $939.92 million net loss driven mostly by non-cash warrant marks. IREN took a $140.4 million non-cash impairment, retiring mining hardware. Customer concentration is real: Nebius disclosed three customers representing 24%, 21%, and 14% of revenue, and TeraWulf leans on Anthropic and Google's $600 million credit backstop for Fluidstack. None of these names pay a dividend.

The idea is to ride the AI infrastructure wave with guardrails. We wrote a free guide on seven suppliers powering the buildout, from power to cooling to networking, here: 7 Stocks Powering the AI Boom (That Aren't Chipmakers).

How to Think About the Swap

These two funds are structurally very different. QQQ is a broad, diversified core holding you can build a portfolio around. The Neocloud ETF, by contrast, is a satellite that hones in on one specific theme, and it does it through structurally levered, cash-flow-negative businesses. A partial reallocation could make sense here. If you size the Neocloud fund as a modest slice of your AI exposure rather than swapping it in for QQQ entirely, you get that pure-play upside without betting your whole portfolio on capital markets staying open for six companies at the same time. One word of caution, though. If you are working in a taxable account, cost basis matters a lot before you start rotating out of appreciated QQQ shares.

Signals That Would Change the Call

Whether this actually works comes down to just two things. First, you have to watch what the hyperscalers are planning to spend on capex. Second, capital markets need to stay open and cooperative. CoreWeave alone raised roughly $18 billion in the second quarter, which gives you a sense of the scale we are talking about. If either of those two pillars weakens, the neocloud ETF will take a much bigger hit than QQQ. But if both hold up, the concentration works in your favor. The smart move is a measured position, sized so that even a total loss would not derail your broader plan, and then weigh that against the diversified exposure a broad tech ETF already gives you.