Applied Digital Corp. (APLD) | The Buildout — AI Infrastructure
The Verdict
Applied Digital is a landlord for the AI buildout. It designs, develops, owns and operates large-scale, purpose-built data center campuses, and it leases powered, cooled, GPU-ready space to hyperscalers on long-duration contracts — the customer installs the AI compute, APLD provides the land, the power and the building. It also owns two North Dakota sites that host Bitcoin mining and a separately listed GPU cloud business, ChronoScale. What makes the model distinctive is that the lease covers the shell and the power, so management says it targets counterparties whose compute demand persists regardless of which AI model wins, rather than taking model risk itself.
| Market Cap | — |
| Revenue (TTM) | $576M |
| Revenue Growth | +167.3% |
| EBITDA Margin (TTM) | -21.6% |
| Net Debt | $3.5B |
| Earnings Beats | 1 of 6 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Contracted long-term lease value reached $36B at FY2026 Q4, up 125% year over year, with roughly $20B of it signed in the single quarter ended May 31, 2026.
- The contracted book covers 1.41 GW of critical IT load across five campuses and three hyperscalers, against roughly 175 MW live after the July 1, 2026 delivery.
- Contracted annual NOI is 'about $2-plus billion,' management said in Q&A, against $39.9M of NOI reported in the latest quarter at a 91% margin — most of the book is not yet earning.
- Execution has been checkable: the first Polaris Forge 1 building took about 24 months from construction start to ready-for-service and the second under 12, with 100 MW delivered on time and on budget and 75 MW more delivered on schedule on July 1, 2026.
- Cost of capital stepped down measurably: a recent $1.5B placement priced at 7%, '225 basis points inside our first placement, which priced at roughly 9.25%,' and the Macquarie joint venture funds three-quarters of the equity.
What We’re Watching
- The ~100 MW Polaris Forge 2 expansion lease was 'near term' in April 2026 and still in 'advanced negotiations' in July; the ~150 MW Delta Forge expansion has no date.
- Base rent was flat across the last two quarters; the next report tests whether the 75 MW delivered July 1, 2026 converts to rent.
- Power is the stated top constraint: Base Electron's ~1.2 GW is guided for 2029 and 2030, and the JETx transmission line between Ellendale and Jamestown has no date.
- Supply chain: the prior ceiling was about 700 MW per year of critical IT load against a 1.5 GW build, and management says the company is 'definitely exceeding that a little bit.'
The case strengthened on contracts and credit over the past year and has not yet strengthened on the income statement. The contracted book grew on multi-year hyperscaler leases signed in a single quarter; counterparty credit improved; and the cost of capital stepped down measurably. In the same period, base rent was flat, adjusted EBITDA dipped slightly, and the GAAP loss widened on stock-based compensation — management itself forward-dates the step-up to when under-construction megawatts reach service. The open question is whether base rent begins to climb as the delivered megawatts energize, or whether fit-out revenue keeps dominating while depreciation arrives.
Earnings
Revenue in the quarter ended May 31, 2026 was $258.7M with a 15.7% gross margin. The company reported adjusted EBITDA of $42.4M and NOI of $39.9M at a 91% margin, and a GAAP net loss to common shareholders of $111.6M, largely on $116.8M of stock-based compensation. The standout metric is the mix: HPC base rent was flat at $44.1M while tenant fit-out services contributed $152.4M.
| Metric | Q4 FY2026 | Q3 FY2026 | Q4 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $259M | $127M | $38M | +580.8% |
| Gross margin | 15.7% | 42.5% | 20.4% | -470bps |
| EBITDA | −$81M | −$5M | −$16M | +395.7% |
| EPS | $-0.39 | $-0.35 | $-0.26 | +47.6% |
| HPC base rent | $44.1M | $44.1M | n/a | Flat QoQ |
| Tenant fit-out revenue | $152.4M | $18.9M | n/a | +$133.5M QoQ |
A year ago, we set a goal for $1 billion of net operating income within 5 years. We now expect to achieve that run rate goal a year from now or 3 years ahead of schedule.— Wes Cummins, Chief Executive Officer, 2026-07-27
Management tone: Management framed FY2026 Q4 as the capstone of a transformational year and led with scale, execution and credit quality rather than defending soft spots. Across the two calls, the framing moved up a level on campus count (1 to 5), contracted value ($7B to $36B), investment-grade mix (a '70%' commitment, then a stated 76% and 'close to 80%'), NOI timing (a five-year goal to 'a year from now') and cost of capital (roughly 9.25% to 7%). They were candid about the supply-chain ceiling ('we're definitely exceeding that a little bit') and about not overextending themselves, and they declined to give a forward NOI margin target or customer compute-mix detail. The investment-grade figure was framed inconsistently within the call — 'over 70% / 76%' in one answer and 'over 80%' in another.
Management Guidance
APLD does not issue numeric revenue, EPS or EBITDA guidance; what management gives is milestones, timing and one capital figure. On the FY2026 Q4 call the CFO guided capex of 'around $600-ish million' for the upcoming quarter, 'and that will take a step up as we enter more advanced stages of construction at the new campuses.' The company also said investors 'should expect to see a significant step-up in our numbers over the coming quarters and years' as capacity comes online, that the $1B NOI run-rate goal is now expected 'a year from now,' and that Base Electron's initial ~1.2 GW arrives in '29 and '30. The ~100 MW and ~150 MW expansion leases are in 'advanced negotiations' with no date.
Trajectory
Revenue has moved from $64.2M in the quarter ended August 2025 to $126.6M, held at $126.6M in the February 2026 quarter, and then roughly doubled to $258.7M in the May 2026 quarter. The growth is not yet rent: HPC base rent was flat in both of the last two quarters, and the sequential increase came from tenant fit-out services ($152.4M in the May quarter versus $18.9M in the February quarter), which management bills at approximately cost. Gross margin was 15.7% in the latest quarter. Management says the current financials 'primarily reflect only the initial 100 megawatts that are online,' against ~175 MW delivered and a build toward 1.5 GW; the most recent 75 MW arrived July 1, 2026, after the quarter closed. Adjusted EBITDA of $42.4M was slightly below the prior quarter's $44.1M.
The Model
The model projects FY+1 revenue of $1,201.5M with EBITDA of $214M (17.8% margin), and FY+2 revenue of $2,474.5M with EBITDA of $1,107M (44.75% margin). The first year sits between the megawatts already delivered and the 1.41 GW contracted; management says current financials 'primarily reflect only the initial 100 megawatts that are online.' The second year's margin step-up rests on the mix rotating from tenant fit-out toward base rent, where the company reports a 91% NOI margin. The projections carry wide dispersion — the FY+1 revenue spread across the model's runs is 54%, and FY+2 is 58%.
| Metric | FY2026 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $576M | $1.2B | $2.5B |
| YoY Growth | — | +108.6% | +106.0% |
| EBITDA | −$125M | $214M | $1.1B |
| EBITDA Margin | -21.6% | 17.8% | 44.8% |
Projections are the median of 4 independent model runs.
APLD does not issue numeric revenue, EPS or EBITDA guidance; what management gives is milestones, timing and one capital figure. On the FY2026 Q4 call the CFO guided capex of 'around $600-ish million' for the upcoming quarter, 'and that will take a step up as we enter more advanced stages of construction at the new campuses.' The company also said investors 'should expect to see a significant step-up in our numbers over the coming quarters and years' as capacity comes online, that the $1B NOI run-rate goal is now expected 'a year from now,' and that Base Electron's initial ~1.2 GW arrives in '29 and '30. The ~100 MW and ~150 MW expansion leases are in 'advanced negotiations' with no date.
What Could Go Right — and Wrong
- The ~100 MW Polaris Forge 2 and ~150 MW Delta Forge expansion leases sign at 'materially higher lease rates than the existing leases and possibly longer duration,' bringing total capacity to 1.66 GW and 'over $6 billion of additional contracted revenue.'
- Base rent steps up as the 75 MW delivered July 1, 2026 and Polaris Forge 2's first building convert contract value into realized rent.
- The 1.7 GW marketing pipeline converts to new-customer leases, widening the counterparty set beyond three hyperscalers.
- Base Electron reaches final investment decision and construction with permitting in hand, giving the >5 GW expansion visibility a dated foundation.
- A further cost-of-capital step-down: the Macquarie joint venture funds three-quarters of the equity, and the recent $1.5B notes priced at 7% against a first placement at roughly 9.25%.
- One customer's decision moves the backlog: roughly $20B of the $36B contracted lease value sits with a single hyperscaler across three campuses, and the 10-Q for the February 2026 quarter still shows one customer at 56% of revenue.
- Power timing slips: Base Electron's initial ~1.2 GW is guided for 2029 and 2030, and the JETx transmission line that would expand Ellendale capacity has no date.
- Supply chain binds: the previously stated ceiling was about 700 MW per year of critical IT load against a 1.5 GW build program, and the FY2025 10-K says 'some of our contracts provide a single source of materials.'
- The revenue mix stays fit-out-heavy: fit-out services run at approximately zero gross margin, base rent was flat, and $1,544.7M of construction in progress has yet to begin depreciating.
- Leverage and share issuance: $5B of debt against $4.2B of cash and ~$1.7B of equity, with $116.8M of stock-based compensation in the latest quarter.
Looking Ahead
Over the next twelve months the story is conversion. Polaris Forge 2's first building is guided to come online 'later in the year,' Delta Forge 1 to initial operations in mid-2027, and management says the ~100 MW and ~150 MW expansion leases are in advanced negotiations — the events that would move revenue from fit-out toward rent. Base Electron's ~1.2 GW of generation does not arrive until 2029 and 2030, so the >5 GW expansion case stays a claim until it reaches final investment decision and construction. Supply chain and power remain the governors management names.
- Near termPF2 100 MW expansion lease — Signing would add ~100 MW with the same Polaris Forge 2 tenant.
- 2026PF2 first building online — Guided as 'later in the year'; tests whether contracted MW converts to rent.
- Mid-2027Delta Forge 1 initial operations — ~$7.5B lease; first delivery at the Southern U.S. campus.
- A year from now$1B NOI run rate — Pulled forward three years from the original five-year goal.
- 2029 and 2030Base Electron initial capacity — ~1.2 GW front-of-meter gas; needs FID, permits and construction.
- Through 2032Expansion to >5 GW — Existing-campus visibility, not yet broken out by campus or power.
Financials
Annual Summary
| Metric | FY2025 | FY2026 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $216M | $576M | $576M | +167.3% |
| Gross Margin | 11.2% | 23.1% | 22.4% | +1,182bps |
| EBITDA | $11M | −$125M | −$125M | -1203.5% |
| EBITDA Margin | 5.2% | -21.6% | -21.6% | 2,689bps |
| Net Income | −$231M | −$244M | −$244M | -5.5% |
| Free Cash Flow | −$797M | −$2.8B | −$2.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)22.4%
- EBITDA Margin (TTM)-21.6%
- Net Margin (TTM)-42.3%
- ROIC-2.9%
- SBC / Revenue38.2%
The Company
Applied Digital designs, develops, owns and operates large-scale, purpose-built data centers for high-performance computing and AI. Its product is powered, cooled, GPU-ready capacity: land, power and a high-density building shell with flexible power and cooling, leased on long-duration contracts to the hyperscalers that install the AI compute inside. Management describes the architecture as one that 'will handle GPUs, TPUs, CPUs… even if you were back to a standard cloud format with much lower power density, our facilities would still work.' The company does not sell models, inference or a differentiated compute product at the parent.
The company runs what management calls a franchise model: each new campus is staffed by 'the same core group of approximately 15 to 20 leadership positions, each reporting directly to headquarters.' It builds in North Dakota — two legacy crypto hosting sites plus Polaris Forge 1 and Polaris Forge 3 — and in the Southern U.S., where Delta Forge 1 sits on more than 600 acres. The build is visible on the balance sheet: total property and equipment cost was $3,068.6M at 2026-02-28, up from $1,278.8M at 2025-05-31, with $1,544.7M of construction in progress. Power is the strategy: 2.1 GW of utility power was contracted over the past year, management says 'everything that we're marketing is grid power,' and the company owns approximately 10% of Base Electron, a ~1.2 GW front-of-meter natural gas project in the Dakotas.
Business Segments
Competitive Landscape
The FY2025 10-K names Digital Realty, Equinix, NTT and various private operators as broad data center competitors, and Bitdeer and Riot Platforms within the crypto hosting segment; the supply-chain map separately lists CoreWeave — the Polaris Forge 1 tenant — as a competitor as well, a 'coopetition' the filing does not discuss. Against that field, management points to its footprint, its status as 'an approved supplier with every major hyperscaler,' and its execution record: it cites industry data that roughly 90% of projects costing more than $1B are delivered late or over budget, and says APLD is among 'the remaining 10%.' It also says the Dakotas region's climate and business environment create 'a barrier to entry that is very difficult to replicate.' The record carries no independent confirmation of those claims, and the item described as hardest to replicate is contracted power — 2.1 GW of utility power contracted in a year, plus the Base Electron stake.
- Digital RealtyNamed in the FY2025 10-K among broad data center providers; not discussed further.
- Named in the FY2025 10-K among broad data center providers; not discussed further.
- NTTNamed in the FY2025 10-K among broad data center providers; not discussed further.
- Named in the FY2025 10-K within the Data Center Hosting segment; not discussed further.
- Riot PlatformsNamed in the FY2025 10-K within the Data Center Hosting segment; not discussed further.
Supply Chain
APLD buys electrical, cooling and construction inputs, assembles powered shells, and leases them to hyperscalers. No supplied neighbor transcript names APLD; Babcock & Wilcox names Base Electron, and CoreWeave appears as an APLD tenant in APLD's own call.
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