Key Takeaways
- Applied Digital rose 8.5% to $21 after forming a 51%-owned, 50 MW wind-powered AI data center venture with Soluna in Texas.
- Fiscal Q1 revenue jumped 322% to $341.9 million, and adjusted EBITDA reached $64.4 million.
- Debt hit $6.4 billion against $3.7 billion of cash just as CoreWeave’s slump put AI infrastructure leverage under scrutiny.
- Fiscal Q2 results, expected around January 12, should show base rent growth and whether the Soluna deal turns binding.
Applied Digital (APLD) had a rough two weeks for reasons mostly outside its control. Shares closed at $24 on October 7, the day of fiscal Q1 results, then slid as CoreWeave (CRWV) stumbled and AI debt fears spread.
They bounced 8.5% to $21 on October 21. A new joint venture with Soluna Holdings (SLNH) for a wind-powered Texas data center helped, and so did a broad AI rally.
The stock still trades 59% below its 52-week high of $51. With a five-year beta of 6.0, Applied Digital moves like a leveraged read on AI credit sentiment.
Fifty megawatts of Texas wind
The joint venture targets a 50 MW critical IT campus for AI and HPC at Project Dorothy 3 near Silverton, Texas.
- Applied funds development and owns 51%, while Soluna contributes land and power assets for 49%.
- Power comes from the 150 MW Briscoe Wind Farm plus the grid.
- ChronoScale (CHRN), Applied’s majority-owned compute platform, signed a nonbinding letter of intent for a triple-net lease.
The project is small next to the 250 MW now live at Polaris Forge 1 in North Dakota. Definitive lease and power agreements still need signatures.
The core business is scaling quickly.
Fiscal Q1 revenue rose 322% to $341.9 million. Tenant fit-out services supplied $183.5 million of that, so the recurring base is smaller than the headline.
Leases do the heavy lifting
Rent is what lenders and investors underwrite. HPC hosting base rent reached $65.8 million in the quarter, with CoreWeave as the anchor tenant at Polaris Forge 1.
The pipeline stretches well past North Dakota. During the quarter, Applied signed a 210 MW, 15-year lease at Delta Forge 2 with an investment-grade hyperscaler, worth about $5.2 billion in base-term revenue. It also secured up to roughly 1 GW of potential power capacity in Finland.
As more buildings start paying rent…
Adjusted EBITDA reached $64.4 million, up from $0.5 million a year earlier. That swing shows how quickly each energized building drops through to earnings.
TIKR tracks 15 analysts on Applied Digital. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Applied Digital, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Applied Digital’s Analyst Ratings
The balance sheet sets the price
At August 31, Applied held $3.7 billion of cash and restricted cash against $6.4 billion of debt. It added $1.59 billion of 7% senior secured notes due 2031 to fund another 150 MW building at Polaris Forge 1 and repay a $300 million bridge loan.
That leverage explains the October selloff. CoreWeave’s shares and bonds slid in mid-October as investors questioned the debt behind the AI buildout, and Applied traded right alongside it.
GAAP results still show the cost: a net loss of $0.82 per share.
Is the market paying a premium anyway? Applied trades at 25.0x forward EV/EBITDA. Bloom Energy (BE), which sells power into the same buildout, trades at 57.0x.
Revenue grew fivefold in a year. Debt grew ninefold.
Enterprise value of $12.1 billion is nearly double the $6.3 billion market cap, so equity holders sit behind a lot of lenders.
My take: Applied Digital has done the hard part by signing investment-grade tenants on 15-year terms, and the Soluna deal is a cheap option on wind-backed capacity. Even so, this stock trades on credit conditions as much as on leases. I’d own it only with conviction that hyperscaler demand keeps the financing window open, and I’d size it for a beta of 6.0.
The $62 average analyst target is about three times the share price, which shows how wide the outcomes are.
Fiscal Q2 results are expected around January 12. Look for base rent growth, signed Soluna agreements and any new debt raises.
So what is Applied Digital stock actually worth?
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