Core Insights - McKinsey projects global data center investments will reach nearly $7 trillion by 2030, with major tech companies like Microsoft and Meta competing for capacity [1] - Applied Digital has emerged as a significant player in this trend, experiencing substantial stock growth over the past 18 months [1] Financial Concerns - Applied Digital's debt has surged from $44 million in Q1 FY2024 to $2.6 billion by November 2025, resulting in a debt-to-equity ratio exceeding 125% [2] - The company is currently operating at a loss, reporting a $125 million loss over the last 12 months, which heightens the risk associated with its growing debt [3] Customer Dependency - The company's revenue is heavily reliant on its HPC Hosting Business, which generates nearly all current and future revenue from a single client, CoreWeave [4] - This dependency poses significant risks, especially if CoreWeave decides to build its own capacity or seeks alternative partnerships [5] Lease Revenue Risks - Applied Digital's growth narrative is largely based on projected lease revenues totaling $16 billion over 15 years, with $11 billion coming from CoreWeave [6] - The lease agreement includes terms that allow CoreWeave to exit the lease without penalties if Applied Digital fails to meet construction deadlines, introducing uncertainty to the revenue stream [7]