Why Did Applied Digital Stock Plummet This Week?

Group 1 - Applied Digital's stock fell 13.1% this week despite securing an $11 billion AI data center deal with CoreWeave [1][2][3] - The company announced a 150MW lease agreement with CoreWeave, increasing its total anticipated contracted lease revenue to approximately $11 billion, which includes $7 billion previously announced [3][4] - Applied Digital's current market capitalization is around $3.6 billion, indicating that the new deal represents more than double the company's market cap, although the revenue will be spread over 15 years [4] Group 2 - The company faces challenges in building and financing the expansion of its infrastructure, needing to construct three data centers over the next two years, which will require substantial capital expenditure [5] - Concerns about valuation persist, as the company carries significant debt and will need to borrow more at high rates or dilute its stock [6] - The reliance on a single customer for a large portion of revenue poses additional risks, especially given that this customer is also highly leveraged and dependent on a small customer base [6]