Key Takeaways APLD's Polaris Forge 1 campus is backed by a full 400MW CoreWeave commitment, boosting multi-year revenue.APLD's capital structure supports growth, with preferred equity and project financing in place.The Zacks Consensus Estimate pegs APLD's fiscal 2026 revenues at $280.9M, up 30.35% year over year.Applied Digital (APLD) shares have appreciated 141.2% in the past six months, outperforming the broader Zacks Finance sector’s increase of 10.7% and the Zacks Financial – Miscellaneous Services indu ...

Core Insights - The rapid global adoption of AI is driving significant investments in AI infrastructure, with a projected spending of nearly $350 billion on AI data centers by public hyperscalers in 2025 [2] - Applied Digital is emerging as a key beneficiary of this trend, with its high-density, liquid-cooled data centers optimized for AI workloads [3] Company Performance - Applied Digital has a robust contracted backlog of nearly $16 billion for AI data center-related revenue, including an $11 billion contract with CoreWeave over 15 years [5] - The company has also secured an additional $5 billion in contracted revenue through a 15-year lease of 200-MW data center capacity at Polaris Forge 2 [6] - Analysts project a revenue growth of 37.9% for Applied Digital in fiscal 2026, reaching $297.3 million, indicating substantial multiyear growth potential [7] Operational Strategy - Applied Digital has integrated operational capabilities with hyperscalers, providing tenant fit-out services that contributed $26.3 million in revenue in the first quarter [8] - The company has effectively managed its supply chain, reducing construction timelines from 24 months to 12-14 months, allowing for rapid capacity ramp-up [10] Capacity Expansion Plans - The first 100-MW capacity at Polaris Forge 1 is complete, with plans to expand to over 1 GW as new regional transmission infrastructure becomes available [11] - Applied Digital is constructing 300-MW capacity at Polaris Forge 2, expected to come online in 2027, with a total active development pipeline of 4 GW [12] Funding and Financial Outlook - The company has secured $2.35 billion through a private offering of senior secured notes to support its expansion plans [13] - Macquarie Capital has committed up to $5 billion in preferred equity financing, which is expected to unlock data center capacity buildout worth $20 billion to $25 billion [14] - Despite a high valuation of 39.5 times sales, the anticipated cash flows from the CoreWeave lease could lead to a net operating income run rate of $1 billion in the next five years [16]

Core Insights - Applied Digital is experiencing significant growth, with shares surging 295% year to date due to rising demand for data center capacity driven by artificial intelligence infrastructure [1][2] - The company is expected to announce more leasing deals in the coming year, which will act as a catalyst for stock performance [2] Industry Context - Publicly traded hyperscalers are projected to spend $350 billion on AI data centers this year, while McKinsey estimates a need for $6.7 trillion globally by 2030 to meet compute power demands [4] - Current lead times for new data centers are at least five years, creating urgency for hyperscalers to secure immediate capacity [5] Company Developments - Applied Digital has signed a long-term lease with CoreWeave for its Polaris Forge 1 campus, expected to generate $11 billion in revenue over 15 years by supplying 400 megawatts (MW) of data center load [6] - A second 15-year lease with an undisclosed hyperscaler, valued at $5 billion, was announced, with plans to supply 200 MW of data center load [7] - The company has a robust development pipeline with 4 gigawatts (GW) of data center load in active projects [7] Financial Position - Applied Digital's current market cap is approximately $7.8 billion, with a gross margin of 14.46% [9] - The company has secured $5 billion in funding from Macquarie Asset Management, which mitigates financing risks associated with construction [11] - Despite a net loss of $28 million last quarter, the company has reduced data center build times from 24 to 12 months, enhancing operational efficiency [10][11] Market Outlook - The current market cap appears to fairly value existing deals, suggesting potential upside for investors with each new lease agreement [12]

This data center company is positioned for explosive growth.A few years ago, there were not enough chips for companies investing in artificial intelligence (AI). Today, chips are no longer a problem. The main bottleneck is securing access to electricity for new data centers.This is a significant opportunity for data center builders like Applied Digital (APLD 0.66%). The stock has climbed more than 300% in 2025.If you have extra cash you can afford to commit to a long-term investing strategy, this stock offe ...

Investment Rating - The report maintains an "Accumulate" rating for the industry [6] Core Insights - In recent years, several Bitcoin mining companies have partnered with AI cloud providers, utilizing part of their electricity for GPU hosting and developing AIDC (AI Data Center) businesses, with contracts totaling $53.6 billion and involving 1.959 GW of power [1][11] - The market perceives that Bitcoin mining companies primarily have an advantage in electricity resources compared to other AIDC competitors, but many have prior experience in self-operated cloud services [4][10] - The report suggests that companies with more AI electricity capacity tend to have higher market valuations, with average valuations of $4.73 million/MW for total electricity, $12.26 million/MW for mining electricity, and $144 million/MW for AI electricity [4][55] Summary by Sections 1. Current Status of Bitcoin Mining Transformation to AIDC - As of November 3, 2025, six Bitcoin mining companies have signed contracts with at least five cloud providers, totaling $53.6 billion and involving 1.959 GW of power [1][11] - Over 50% of the AI cloud providers that signed contracts with Bitcoin mining companies are emerging firms, with Coreweave being the largest [2][13] - The average contract duration for AIDC projects is 14 years, with a minimum of 5 years and a maximum of 25 years [3][24] - The average price for key IT load contracts is $1.73 million/MW/year, indicating a consistent pricing structure across projects [3][27] 2. Reasons and Models for Transformation - The transition to AIDC is driven by the uncertainty in revenue and profitability from Bitcoin mining, which faces challenges such as fluctuating prices and increasing competition [33][35] - AIDC offers higher gross margins compared to Bitcoin mining, with various projects reporting net operating income margins between 80% and 88% [40][39] 3. Self-Operated Cloud Services by Mining Companies - Companies like Iris Energy, Hive Digital, and Bitdeer are actively developing self-operated AI cloud services, with Iris Energy expected to operate 140,000 GPUs by the end of 2026 [43][47] - Bitdeer plans to operate 1,160 GPUs by the end of 2025, while Hive Digital aims to exceed 11,000 GPUs by the end of 2026 [44][51] 4. Future Outlook for AIDC Transformation - The report anticipates an acceleration in the transformation of Bitcoin mining companies to AIDC, as companies with more AI electricity capacity are valued higher in the market [55] - The report highlights the importance of companies having substantial electricity reserves and experience in AI cloud services for future investment opportunities [4][55]

Core Insights - Applied Digital is transitioning from a Bitcoin mining data center operator to a dedicated AI infrastructure provider [1][3] - The main challenge in AI infrastructure is not GPU supply but the availability of data centers that can handle high power density and advanced cooling needs [3] Company Developments - Applied Digital has been acquiring essential resources such as land, power, construction teams, supply chain contracts, and engineering talent to establish AI-focused data centers [3] - The company has secured a significant lease expansion with CoreWeave, increasing the contract value from $7 billion to $11 billion over 15 years, with expectations of nearly $500 million in annual net operating income from this lease [4] Market Position - Applied Digital is well-positioned to benefit from the projected $350 billion investment in AI data centers by publicly traded hyperscalers by 2025 [3] - The company plans to expand its data center capacity at Polaris Forge 1 beyond 1 gigawatt from 2028 to 2030 and is constructing a 300-megawatt data center at Polaris Forge 2, with plans to scale it to 1 gigawatt [6] Financial Metrics - The current market capitalization of Applied Digital is $9 billion, with a gross margin of 14.46% [5][6] - The company has already leased 200 megawatts of its under-construction capacity for $5 billion in contracted revenues over 15 years [6]

Core Insights - Applied Digital (APLD) shares have increased by 272% over the past 12 months, significantly outperforming the Zacks Finance sector's growth of 11.8% [1][10] - APLD has outperformed competitors such as Riot Platforms (RIOT), which saw a 39.1% increase, and Equinix (EQIX), which experienced a 23.2% decline [1][10] - The company's quarterly results are expected to be volatile due to ongoing large AI campus developments and financing activities, which may impact stock performance in the near term [1] Transition and Growth Catalysts - APLD is shifting from low-margin tenant fit-outs to long-duration leases, with key milestones including lease commencements at Forge 1 in late 2025 and full occupancy of additional buildings by mid-2026 and 2027 [2] - New or expanded agreements with hyperscalers, such as the investment-grade lease at Polaris Forge 2, are anticipated to provide additional revenue visibility [2] Financial Performance and Estimates - The Zacks Consensus Estimate for APLD's second-quarter fiscal 2026 loss is projected at 10 cents per share, an improvement from a loss of 66 cents per share in the same quarter last year [4] - For fiscal 2026, the consensus loss estimate is 31 cents per share, which is narrower than the 80 cents loss reported in fiscal 2025 [4] Valuation Metrics - APLD is trading at a forward 12-month sales multiple of 21.4X, compared to 9.07X for the broader sector and 5.3X for the S&P 500, indicating a premium valuation that assumes successful buildouts and leasing [5] - The company also trades at a premium relative to peers, with RIOT and EQIX trading at 7.63X and 7.27X, respectively [5] Risks and Challenges - APLD's near-term revenues are heavily reliant on low-margin fit-out work, with significant cash outflows; the company reported approximately $114 million in cash and $687 million in total debt [6] - Customer concentration is a concern, as CoreWeave is the sole tenant for the fully leased 400 MW at Polaris Forge 1, which poses risks related to delays or financing gaps [7] - APLD faces competition from Riot Platforms and Equinix, with the latter offering a diversified approach to infrastructure demand and Riot expanding into high-performance computing [8]

Core Insights - There is a rising interest in high short-interest stocks ahead of Q1 2026, with many stocks having robust outlooks but being heavily shorted, leading to depressed prices and potential for rebounds [1][2] Group 1: Stock Analysis - JPMorgan Chase will begin peak fiscal 2025 Q4 reporting on January 13, 2026, indicating limited time for positioning ahead of the season [2] - Hims & Hers Health has faced pressure due to GLP market shifts but is expected to see growth slow to the high-20% range in fiscal Q4, with a 30% short interest suggesting a potential squeeze [3][4] - Applied Digital's short-covering rally is likely underway, with AI capacity sold out and demand increasing, affirming robust forecasts and a 50% revenue outlook increase upon completing its second campus [7] Group 2: Market Trends - Many quality stocks with strong outlooks have been heavily shorted in the latter half of 2025, setting them up for rebounds in 2026, driven by AI demand for infrastructure and services [5] - Analysts are raising price targets and issuing upgrades, indicating a potential 15% rebound at consensus, which could push the market above critical moving averages [4]

Core Insights - Applied Digital (APLD) is transitioning to AI data centers with a focus on long-duration leases and a finance-and-build model that is repeatable [1][9] - The company emphasizes water-efficient liquid cooling, speed to delivery, and secured supply as key design principles [1][2] - APLD is shifting from low-margin fit-out projects to recurring rental income as buildings reach lease revenue milestones [1][9] Business Strategy - APLD is targeting high-density AI workloads with direct-to-chip liquid cooling, achieving a design Power Usage Effectiveness (PUE) of 1.18 and near-zero water usage [2] - The company is leveraging over 200 days of natural cooling in the Dakotas to enhance efficiency and cooling capabilities [2] - APLD is compressing build timelines from approximately 24 months to 12-14 months, with around 700 MW currently under construction [5][6] Lease Agreements - The Ellendale (Polaris Forge 1) project has expanded to a fully leased 400 MW with CoreWeave, generating approximately $11 billion in contracted lease revenues over 15 years [3] - APLD signed a lease for 200 MW at Polaris Forge 2 with an investment-grade hyperscaler, valued at about $5 billion over 15 years, with potential for an additional 800 MW [4] Financial Performance - APLD shares have increased by 227.9% over the past 12 months, outperforming the broader Zacks Finance sector and competitors like Riot Platforms and Equinix [7] - The Zacks Consensus Estimate for fiscal 2026 revenues is projected at $280.9 million, indicating a 27% growth from fiscal 2025 [8] Competitive Landscape - The competition is intensifying as Riot Platforms expands into high-performance computing, targeting over 1 GW for AI workloads [10] - Equinix operates a global network of over 260 data centers, increasing competition for AI-ready capacity and timelines [10]

Core Insights - Applied Digital Corporation (NASDAQ: APLD) specializes in AI-focused data centers and high-performance computing (HPC) facilities, with its stock increasing nearly 22% over the past five trading days and approximately 4x year-to-date, driven by favorable trends in the AI sector [2] - The completion of its first AI data center, a 100-megawatt facility in North Dakota, has provided investors with confidence in the company's ability to meet its ambitious infrastructure goals [2] - The company's current valuation is close to $9 billion, with a high forward revenue multiple of 33x, raising questions about the sustainability of its stock rally [2] Company Overview - Applied Digital develops custom-built AI data centers designed to meet the extreme power density, cooling requirements, and scalability needs of accelerated computing, utilizing liquid cooling and renewable energy solutions [4] - The company’s tailored approach gives it a competitive advantage over traditional colocation and cloud service providers, as it refines each component specifically for GPUs and high-density computation [5] Market Position - Expenditures by major tech companies on AI infrastructure are projected to exceed $380 billion in 2025 and potentially reach over $500 billion by 2026, creating a significant demand for purpose-built data centers [6] - Applied Digital is strategically positioned to benefit from this trend, constructing and operating AI/HPC campuses while leasing power capacity to hyperscalers through long-term agreements, ensuring predictable multi-year revenue [7] Service Offerings - The company is enhancing its service offerings through the Applied Digital Cloud, providing GPU-as-a-Service to enterprises, and partnering with Nvidia and Super Micro to deploy optimized GPU nodes for AI and HPC workloads [8] Financial Projections - Despite a high valuation, Applied Digital is expected to experience rapid growth, with anticipated revenue growth of around 38% for 2026 and approximately 85% for 2027, driven by increasing AI workloads [9] - The company’s multi-gigawatt capacity pipeline and dedicated anchor customers position it as a key beneficiary in the growing AI data center market [9] Competitive Landscape - The market for AI data center services is becoming increasingly competitive, with traditional hyperscalers and cloud providers expanding their capabilities, which may impact Applied Digital's margins and customer acquisition [10]