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Applied Digital Corporation - Common Stock
Our verdict on Applied Digital Corporation - Common Stock isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Capex has accelerated significantly into FY2026, with property and equipment net increasing from $1.25 billion at May 31, 2025, to over $3.0 billion by February 28, 2026. (1 exceeded across 1 tracked commitment)
“We believe that the significant investments in property and equipment will remain throughout fiscal year 2025 as we continue construction of our HPC hosting facilities.”
The company successfully energized its first 100 MW HPC data center (Building 2) for CoreWeave in November 2025, contributing to a significant revenue inflection. (2 met across 2 tracked commitments)
“Approximately $85.0 million of the increase was due to revenue generated related to our HPC Hosting Business, with approximately $73.0 million related to tenant fit-out services and $12.0 million related to rental revenues as ELN-02 at Polaris Forge 1 fully energized during the current quarter.”
See the full cited Management analysis of Applied Digital Corporation - Common Stock
How durable is the business?
The company's moat is expanding through massive new lease commitments and project financing. It secured a 400 MW contract with CoreWeave and announced a $3 billion, 280 MW campus (Polaris Forge 2), significantly increasing its secured power pipeline. (2 expanding)
“The Company combines hyperscale expertise, proprietary waterless cooling, and rapid deployment capabilities... [Page 30] power generation facility with an expected nameplate capacity of approximately 1.2 GW.”
The segment is currently in a pre-revenue construction phase but has secured massive long-term leases with CoreWeave for 250 MW of capacity, validating the business model shift toward AI infrastructure. (1 expanding)
“We anticipate that this business segment will begin generating meaningful revenues once the first building within Polaris Forge 1 becomes operational, which is expected in calendar year 2025.”
See the full cited Business Model analysis of Applied Digital Corporation - Common Stock
Where does growth come from?
The company has broken ground on its first 100 MW HPC facility in Ellendale and is planning a total of 400 MW capacity across three buildings at that campus. (1 new trend, 4 accelerating across 5 signals, 1 leading indicator)
“We recently commenced operations at our first HPC data center at our Polaris Forge 1 campus with 100MW of capacity. We continue building our second HPC data center at Polaris Forge 1 to provide an additional 150MW of capacity... Our third HPC focused data center facility at Polaris Forge 1, which is expected to provide an additional 150MW of capacity, is currently under construction, with an anticipated ready for service date in 2027.”
While the HPC segment is being built out, the Cloud Services segment (AI/ML compute) has officially launched and begun generating revenue, showing a rapid ramp-up from zero. (5 accelerating across 5 signals)
“HPC Hosting Business Revenue $ 71,008 [for the three months ended February 28, 2026]... We recognized $71.0 million and $182.3 million, in revenue from this business segment during the three and nine months ended February 28, 2026, respectively.”
See the full cited Future Growth analysis of Applied Digital Corporation - Common Stock
What could break the thesis?
The risk has transitioned from a 'discontinued operation' back to a 'continuing operation' failure. The company recorded a $59.7 million impairment charge because the segment no longer met 'held for sale' criteria. (1 intensifying, 1 high-severity)
“the Company recorded a loss on classification of held for sale of $59.7 million for the three and nine months ended February 28, 2026 representing the write down of the Cloud Services Business assets to their carrying value”
The risk is transitioning to a disposal phase. The segment is now officially classified as 'held for sale' and 'discontinued operations,' with a $24.6 million gain on classification helping offset previous losses, though a sale has not yet closed. (4 stable, 1 resolved, 1 high-severity)
“the complaint asserts claims pursuant to Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 based on allegedly false or misleading statements regarding the company’s business, operations, and compliance policies, including claims that the Company overstated the profitability of its Data Center Hosting Business”
See the full cited Risk analysis of Applied Digital Corporation - Common Stock
Read the full thesis on Applied Digital Corporation - Common Stock
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