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Key Takeaways
- Applied Digital fell 4% this morning after Democrats won both chambers of Congress, and CoreWeave fell with it.
- New laws still need President Trump’s signature, and states and towns issue most data center permits.
- Riot Platforms signed a 910 MW lease with a frontier AI lab this morning.
- Applied Digital’s bigger risk came before the vote: it still has to finance about 800 MW, and its interest expense tops its base rent.
Applied Digital (APLD) sank 4% this morning after Democrats swept Tuesday’s midterms, and its tenant CoreWeave (CRWV) fell 7%. Tech stocks “could feel the heat,” said Quilter strategist Kit Rees, with “greater regulatory scrutiny, especially when it comes to the buildout of data centres.”
But this morning, Riot Platforms (RIOT) signed a 15-year lease, worth about $28 billion, with a frontier AI lab for all 910 MW of its Texas campus.
Congress doesn’t permit data centers
Any bill a Democratic Congress passes still needs Trump’s signature or a veto override, and states and towns grant most zoning, permits and power hookups.
Going into the vote, analysts expected Applied Digital’s revenue to more than triple from fiscal 2026 to fiscal 2028.
Those estimates rest on 1,410 MW of signed leases, which the election doesn’t change.
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The real heat is the financing
At Monday’s close, Applied Digital traded at 4.7x forward sales, less than half its 3-year average of 10.6x.
CEO Wes Cummins said Monday that Applied Digital still has to finance about 800 MW over the next 12 months. It has built mostly with debt, which now far outruns its cash.
Debt reached $6.4 billion by Aug. 31. In the quarter to that date, interest expense of $77.4 million topped the $65.8 million of base rent it collected.
CoreWeave adds to the strain. Its lease is about 30% of Applied Digital’s contracted revenue, and its 2031 bonds yielded over 16% in mid-October, Reuters reported.
Riot’s deal shows a cheaper model. Its tenant buys and runs the computers, so Riot expects to spend about $6 million per MW and doesn’t expect to issue stock. Management has said Applied Digital’s new campuses cost near $13 million per MW.
Investors are selling the wrong risk
The election sell-off looks overdone. Applied Digital’s leases are signed, and funding the next 800 MW was the test before Tuesday too.
Of course, tighter state permit rules could slow campuses beyond today’s 1,410 MW. Watch the financing for Polaris Forge 3 and the two Delta Forge campuses, and the fiscal second-quarter report in January.
So what is Applied Digital stock actually worth?
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