Key Takeaways
- Applied Digital rose 20% in the past week as AI data center stocks rebounded on results from IREN and CoreWeave.
- CoreWeave’s raised outlook makes its $11 billion lease with Applied Digital look safer.
- Jim Chanos has a point: interest expense topped base rent last quarter, and analysts expect losses through fiscal 2029.
- The stock is cheap against its own history, but it’s a bet on what its next round of debt costs.
Applied Digital (APLD) stock is up 20% in the past week, rebounding with its group from the 52-week low it hit on Nov. 5. The gain held through a 5.4% drop on Nov. 12, when Nvidia CEO Jensen Huang resigned and Nebius trimmed its 2026 outlook.
First, IREN (IREN) said its $4 billion-plus revenue run-rate target, now set for January, is “fully contracted and fully funded.” Then CoreWeave (CRWV), which leases all 400 MW of Applied Digital’s Polaris Forge 1 campus, reported.
CoreWeave’s quarter makes the rent look safer
CoreWeave, up 30% over the week, grew revenue 168% to $3.7 billion and raised its 2026 guidance. It said customer prepayments and loans backed by its contracts will fund its growth. Great news for its landlord. The Polaris Forge 1 lease is worth about $11.0 billion over 15 years, 30.4% of Applied Digital’s contracted revenue, and it’s take-or-pay.
That’s why analysts expect revenue to more than triple from fiscal 2026 to fiscal 2028:
Chanos has a point about the profits
Profits are much further off. On Nov. 8, Jim Chanos, founder of Chanos & Company, noted on X that bitcoin miners turned data center companies aren’t expected to be profitable until 2029-30. Since they capitalize start-up costs until the revenue arrives, he asked why it takes so long: “Don’t let these promoters get away with this nonsensical narrative.”
Applied Digital’s numbers fit that pattern. It capitalized $35.7 million of interest in the quarter to Aug. 31 and still expensed $77.4 million, more than its $65.8 million of base rent. Analysts expect losses through fiscal 2029. And CEO Wes Cummins told CNBC on Nov. 2 that about 800 MW still needs funding within 12 months.
TIKR tracks 16 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
Cheap, with a bill to pay
The stock trades at about 5x forward sales, less than half its three-year average of 10.6x:
After CoreWeave’s quarter, the rent is less of a worry. But how long profits take depends on what Applied Digital pays to borrow, so watch the rate on up to $4.6 billion of revenue bonds proposed for its Louisiana campus. Near the 7.00% on its June notes, this multiple looks like an opportunity. Near the 9.25% on its November 2025 notes, lenders keep more of the rent. The better entry comes once that rate is set, with the fiscal second-quarter report in January as the next test.
So what is Applied Digital stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
