UmbriaExplore our travel guides. Share your stories, tips and questions on Reddit.
Fast movers • Alerts • Momentum
10% OFF with SAVE10
Charts • Watchlists • Multi-broker tools
Built for active traders
Biotech catalyst, news and analysis PDUFA tracker
Biotech catalyst, news and analysis PDUFA tracker
Delivered capacity, recurring rent and the financing claims before value reaches the common share.
Get every Merlintrader report in real time on Telegram: join @merlintraderpub_com.
The definitive proxy sets a virtual-only annual meeting for November 4, 2026 at 12:00 p.m. ET, record date September 8, with votes on six directors, the auditor for fiscal 2027 and say-on-pay. Source The company also expects 300 MW of delivered critical IT load across its North Dakota campuses by the end of calendar 2026. Results release
Macquarie-related capital finances the development through a structure that includes both preferred and common project interests. The May 31, 2026 annual report records US$1.825 billion funded across the disclosed TopCo 2 closings, and a 13.5% fully diluted common interest for the outside investor, alongside preferred units. Annual report, redeemable noncontrolling-interest note. That common percentage alone does not summarize the economic claim. The preferred instrument has its own accrual, redemption and priority terms.
Bull scenario. Construction and utility milestones hold, customers accept capacity, recurring base rent expands and project financing remains available on workable terms. The operating proof is more delivered capacity accompanied by disclosed rental income and a cash reconciliation. The common-equity proof is that this progress outpaces the growth of senior claims and the share denominator. Revenue growth driven principally by customer installation work would provide weaker confirmation than growth in the recurring rental engine. This is an editorial scenario, without an assigned probability or price objective.
Bear scenario. A delay in power availability, construction or customer acceptance pushes back rent while interest and completion obligations continue. Cost overruns consume capital that had supported later phases. Difficult market conditions make refinancing or preferred conversion more expensive for common holders. The warning is a deterioration in the relationship between delivered capacity, recurring cash generation and the claims financing that capacity; a volatile share price alone does not establish that deterioration.
Results for the quarter ended August 31, 2026 were released on October 7, 2026 after market close, as scheduled by the September 28 notice. Revenue was $341.9 million, up 322% year over year; net loss from continuing operations attributable to common stockholders was $221.0 million, or $0.76 per share; adjusted EBITDA, a non-GAAP measure that excludes ChronoScale, was $64.4 million. At August 31 the company reported $3.7 billion of cash, cash equivalents and restricted cash against $6.4 billion of debt, and leases for about 1.41 GW of critical IT load representing about $36 billion of contracted revenue over their initial base terms. Earnings release, Form 8-K exhibit 99.1 · Conference-call notice.
Historical context, superseded where indicated by the October update: Applied Digital has moved beyond announcing sites: its July 1, 2026 release reported 175 MW of live capacity at Polaris Forge 1, while the July 27 results described a much larger contracted development portfolio. Delivery announcement Results. The economic question is how much of the value created by delivering that portfolio reaches the common shareholder after construction costs, debt service, preferred claims and additional shares. A lease signature supplies evidence of customer demand; it does not complete that economic conversion.
Current status: Applied Digital’s October 2, 2026 release reports another 75 MW of critical IT load ready for service at Polaris Forge 1 in Ellendale, North Dakota. The delivery comprises three 25 MW data halls in the second phase of Building 2. That building now has its full 150 MW in service, and the campus total is 250 MW. The July milestone of 175 MW remains valid as history; it is no longer the current operating-capacity figure. Primary source
Morgan Stanley kept its Equal-Weight rating on Applied Digital and raised its price target to $41 from $37.50, Dow Jones Newswires reported on October 12, 2026. A third-party analyst opinion, not a Merlintrader view and not a recommendation.
Base Electron announced on October 9 that it confidentially submitted a draft registration statement for a proposed initial public offering. The size and price range have not been determined. This is a proposed Base Electron IPO, not an IPO of already-listed Applied Digital, and Base Electron is not a wholly owned subsidiary. The confidential submission is an early filing step, not a completed offering or cash proceeds already received by Applied Digital.
Wells Fargo kept its Overweight rating on Applied Digital and raised its price target to $55 from $50, Dow Jones Newswires reported on October 8, 2026. A third-party analyst opinion, not a Merlintrader view and not a recommendation.
Freedom Capital Markets kept its Buy rating on Applied Digital and kept its $48 price target, Dow Jones Newswires reported on October 8, 2026. A third-party analyst opinion, not a Merlintrader view and not a recommendation.
Needham kept its Buy rating on Applied Digital and cut its price target to $70 from $83, Dow Jones Newswires reported on October 8, 2026. A third-party analyst opinion, not a Merlintrader view and not a recommendation.
Revenue for the quarter ended August 31, 2026 rose 322% to $341.9 million. HPC Hosting contributed $262.6 million, of which $65.8 million was base rent and $183.5 million tenant fit-out services; Data Center Hosting $37.8 million; ChronoScale $41.5 million. The net loss attributable to common stockholders from continuing operations was $221.0 million ($0.76 per share), $237.1 million ($0.82) including discontinued operations; the adjusted net loss (non-GAAP, excluding ChronoScale) was $4.1 million. The company closed $1.59 billion of 7.000% senior secured notes due 2031 and reported $3.7 billion of cash, cash equivalents and restricted cash against $6.4 billion of debt. It gave no financial guidance.
Applied Digital entered into an agreement providing access to up to 1 GW of potential power capacity in Finland, its first development opportunity outside the United States, where it plans an AI Factory campus. Initial power availability is anticipated beginning in 2028. The company has begun marketing the site and is in discussions with hyperscale customers; no tenant has been announced, and future investment is tied to customer demand, commercial milestones and regulatory requirements.
Applied Digital's October 2, 2026 release reports another 75 MW of critical IT load ready for service at Polaris Forge 1 in Ellendale, North Dakota. The delivery comprises three 25 MW data halls in the second phase of Building 2. That building now has its full 150 MW in service, and the campus total is 250 MW. The July milestone of 175 MW remains valid as history; it is no longer the current operating-capacity figure.
The notice confirms the reporting checkpoint; the new quarter’s financial figures have not been released in this notice.
The definitive proxy sets a virtual-only annual meeting for November 4, 2026 at 12:00 p.m. ET, record date September 8. Holders vote on six directors, the ratification of CBIZ CPAs as auditor for fiscal 2027, say-on-pay and a possible adjournment.
Latest official share count and preferred-conversion terms update the ownership picture after the annual balance sheet.
Applied Digital confirmed Brookwood, in Tuscaloosa County, Alabama, as the site of its Delta Forge 2 AI data center campus, an investment of more than $3.2 billion from the company and its tenant, and the county economic development authority signed off on the project the same day. Local reports cite about 1.26 million square feet on 160 acres, a construction peak above 1,000 workers, more than 100 permanent jobs, and $270 million of community-benefit payments over 20 years. The 210 MW lease was already disclosed in the annual report.
Additional usable capacity is an operating milestone, distinct from the much larger contracted portfolio.
The full deep dive has the answer’s building blocks: cash, dilution, catalysts and risks, every figure sourced.
Free. No signup. You decide, we don’t recommend.
Historical context, superseded where indicated by the October update: Applied Digital has moved beyond announcing sites: its July 1, 2026 release reported 175 MW of live capacity at Polaris Forge 1, while the July 27 results described a much larger contracted development portfolio. Delivery announcement Results. The economic question is how much of the value created by delivering that portfolio reaches the common shareholder after construction costs, debt service, preferred claims and additional shares. A lease signature supplies evidence of customer demand; it does not complete that economic conversion.
Current status: Applied Digital’s October 2, 2026 release reports another 75 MW of critical IT load ready for service at Polaris Forge 1 in Ellendale, North Dakota. The delivery comprises three 25 MW data halls in the second phase of Building 2. That building now has its full 150 MW in service, and the campus total is 250 MW. The July milestone of 175 MW remains valid as history; it is no longer the current operating-capacity figure. Primary source
Bull scenario. Construction and utility milestones hold, customers accept capacity, recurring base rent expands and project financing remains available on workable terms. The operating proof is more delivered capacity accompanied by disclosed rental income and a cash reconciliation. The common-equity proof is that this progress outpaces the growth of senior claims and the share denominator. Revenue growth driven principally by customer installation work would provide weaker confirmation than growth in the recurring rental engine. This is an editorial scenario, without an assigned probability or price objective.
Base scenario. Applied Digital continues its staged buildout, with strong but uneven reported growth because installation revenue, rent commencement and financing closings fall in different periods. Existing facilities produce income while new campuses consume construction cash. Further financing can be commercially sensible, but its terms determine whether operating expansion translates into proportionate progress per share. Reporting therefore remains a sequence of project and capital checkpoints rather than a smooth earnings progression.
Bear scenario. A delay in power availability, construction or customer acceptance pushes back rent while interest and completion obligations continue. Cost overruns consume capital that had supported later phases. Difficult market conditions make refinancing or preferred conversion more expensive for common holders. The warning is a deterioration in the relationship between delivered capacity, recurring cash generation and the claims financing that capacity; a volatile share price alone does not establish that deterioration.
The complete bull case is that customers value speed to usable power and the company can repeatedly deliver specialized infrastructure. The July 2026 operating announcement is stronger evidence than a pipeline slide because it identifies capacity that actually entered service. Delivery announcement. Long leases can make financing more predictable and let a growing operating base support subsequent development. The case needs continued execution across different campuses, together with evidence that funding costs and dilution remain manageable.
The complete bear case is that a developer can win valuable contracts and still distribute a disappointing residual to ordinary shareholders. Consolidated assets and revenue include economic interests belonging to lenders, preferred investors and minority holders. High headline liquidity can include restricted funds, and adjusted profit can remove a substantial recurring cost of issuing equity. None of these distinctions invalidates the infrastructure opportunity; they determine which investor captures it.
Applied Digital develops and operates infrastructure that supplies customers with space, electricity, cooling and the environment needed to run demanding computing equipment. Its annual report for the year ended May 31, 2026 distinguishes the HPC hosting operation from cryptocurrency data-center hosting and the cloud activity now housed in ChronoScale. Annual report. An investor needs these boundaries because the businesses have different sources of demand, different capital requirements and different accounting measures of progress.
The large AI campuses are primarily an infrastructure proposition. A customer contracts for usable computing capacity supported by power and cooling, while Applied Digital finances and builds the facilities. This differs economically from selling an enterprise AI application or earning a fee each time a model answers a question. The company can benefit from demand for AI infrastructure without owning the ultimate software relationship or all of the computing hardware deployed by the tenant. Success depends on delivering what the lease requires at an acceptable cost.
The cryptocurrency operation remains relevant to the funding and earnings picture. The May 31, 2026 annual report records US$154.403 million of cryptocurrency hosting revenue for FY2026 and describes customer concentration in that activity. Annual report, segment note and risk factors. Its operating facilities provide an existing source of income, but cryptocurrency economics and customer decisions remain distinct from the long-duration hyperscaler leases. Treating all of the revenue as recurring AI rent would misdescribe what the company earned.
ChronoScale adds another boundary. The September 25, 2026 proxy describes Applied Digital’s ownership at approximately 96% following the separation into a distinct public company. Proxy. Separate trading does not by itself remove the subsidiary from consolidation. Management can exclude that activity from measures intended to describe its core infrastructure business while GAAP accounts continue to include it. Any comparison depends on which perimeter it uses, and that has to be clear before drawing a conclusion about growth or profitability.
The commercial advantage management promotes is the ability to organize sites, power, cooling and construction around customer deployment needs. That claim becomes useful evidence when completed phases enter service and when later financial reports show rent associated with the delivered capacity. A repeating design can reduce some execution friction, but a franchise description does not demonstrate that every campus will have the same cost, schedule or return. Geography, contractors, grid connections and customer specifications still differ.
The right reading therefore starts with the transaction being measured. Installation work helps a customer occupy a facility; base rent pays for the use of the completed infrastructure; energy reimbursement recovers operating costs; financing supplies development cash. These can all increase the reported scale of the company, but they are not interchangeable sources of sustainable earnings for common shareholders. The following chapters examine the movement between those categories rather than using aggregate revenue as a substitute for the business model.
Applied Digital's October 2, 2026 release reports another 75 MW of critical IT load ready for service at Polaris Forge 1 in Ellendale, North Dakota. The delivery comprises three 25 MW data halls in the second phase of Building 2. That building now has its full 150 MW in service, and the campus total is 250 MW. The July milestone of 175 MW remains valid as history; it is no longer the current operating-capacity figure. Primary source
The campus is fully leased for 400 MW at complete buildout, according to the same release. This creates a useful distinction between 250 MW operational and 400 MW contracted at full buildout. The remaining 150 MW is the arithmetic difference, not an announcement that another phase has already entered service. Nor does campus IT load describe the total utility power requirement: the two measures are not interchangeable in discussions of power supply or construction economics. Primary source
The milestone strengthens the execution evidence because it concerns completed readiness rather than a new site announcement or a lease signature. It does not supply a new revenue statement, project margin, distributable cash figure or common-share earnings estimate. The next financial report must show how the delivery affects base rent, cost recovery, operating expenses, debt service and the cash attributable to shareholders after other capital claims. Primary source
For the operating scenarios, the constructive case now starts from a larger installed base and requires reliable customer use, completion of the remaining capacity and improving cash conversion. The mixed case includes successful physical delivery but weaker economics after financing and construction costs. The adverse case includes interruptions, delayed remaining phases or incremental capital needs. The announced 250 MW reduces one construction uncertainty while leaving those economic tests open. Primary source
Readers should follow actual in-service capacity and its disclosure date alongside the contracted portfolio. Comparing those categories makes subsequent progress measurable without treating all signed megawatts as already productive. Future statements must also distinguish recurring rent from installation and reimbursable work, so a large revenue increase is not automatically interpreted as an equal increase in durable rental economics. Primary source
The annual report filed July 29, 2026 describes 1,410 MW of contracted critical IT load across five campuses and approximately US$36.2 billion of base-term contracted lease revenue. Annual report, contracted lease portfolio. This is the portfolio disclosed by that date, including a lease signed after the financial year-end. The annual report’s subsequent-events note identifies the Delta Forge 2 agreement as signed on June 5, 2026, so the complete portfolio was not yet fully contracted on May 31, 2026. Annual report, subsequent events.
The July 2026 portfolio consists of Polaris Forge 1, Polaris Forge 2, Polaris Forge 3, Delta Forge 1 and Delta Forge 2. The annual report filed July 29, 2026 discloses respective contracted capacities of 400, 200, 300, 300 and 210 MW, with approximate base-term lease values of US$11.0, US$5.0, US$7.5, US$7.5 and US$5.2 billion. Annual report, contracted lease portfolio. These are long-duration contractual values, rather than annual revenue or the amount recognized in the latest accounts. The identities of the unnamed hyperscalers remain undisclosed in the cited materials; speculation about a particular technology company adds no verified information.
Historical context, superseded where indicated by the October update: Delivery occupies a separate column. The July 1, 2026 release announced another 75 MW entering service at Polaris Forge 1, bringing that campus’s live capacity to 175 MW. Delivery announcement. This milestone does not make the remaining contracted portfolio operational. It demonstrates that another phase reached service readiness, while the other phases still require construction, energization and acceptance. The precise reported building labels vary across disclosures; the capacity, phase and disclosure date are the safer identifiers for following progress.
Management’s July 29, 2026 annual report provides broad delivery windows: Polaris Forge 1 extends into the first half of 2027; Polaris Forge 2 spans the second half of 2026 through the first half of 2027; Polaris Forge 3 spans the second half of 2027 through the second half of 2028; Delta Forge 1 spans the first half of 2027 through the first half of 2028; Delta Forge 2 is shown in the first half of 2028. Annual report, business discussion. These are company expectations, not guarantees of completion on a particular day.
Capacity in a development pipeline is further removed from revenue. Land, identified power, utility discussions, marketing activity and an executed lease describe different stages. Gross utility power also includes infrastructure requirements beyond critical IT load. Comparing a grid-power pipeline directly with contracted IT capacity can exaggerate the apparent amount already secured for customers. The labels and the stage of commitment matter more than selecting the largest available figure.
The next operational update should be tested campus by campus. Has the company completed the necessary electrical infrastructure? Is the customer receiving usable capacity? Has rental recognition begun? What remains to be spent? A capacity announcement becomes more valuable when those answers appear together. An absence of new leasing can coexist with substantial progress on existing contracts, while a new lease can coexist with no immediate increase in cash-generating capacity.
The annual report filed July 29, 2026 describes long-duration leases and contractual protections, but also warns that significant construction delays can give tenants termination rights. Annual report, lease note and risk factors. These statements belong together. A take-or-pay structure protects against some changes in the customer’s desired utilization; it does not excuse the developer from delivering a compliant, usable facility. Completion, service levels and the precise obligor remain material.
The present revenue base is more concentrated than the broader future portfolio might suggest. The FY2026 annual report says the HPC activity had a single customer accounting for 59% of consolidated revenue from continuing operations, while the cryptocurrency activity’s single customer accounted for 25%, for the year ended May 31, 2026. Annual report, customer-concentration risks. Signing additional campuses can diversify future receipts, but that is different from having a diverse operating revenue base in the audited period.
CoreWeave’s obligations require attention to their legal structure. The March 30, 2026 arrangements, described in Applied Digital’s quarterly and annual filings, suspended the parent lease for certain data halls and introduced a lease with CoreWeave Compute Acquisition Co. VIII, LLC; another lease was assigned to that subsidiary with a release of the parent from the original lease. Quarterly report, subsequent events Annual report. Applied Digital also disclosed springing parent guarantees and a letter-of-credit obligation. Those protections are documented, but they do not amount to an unconditional direct parent lease for every hall.
A counterpart’s financing announcement helps verify the narrower credit context. CoreWeave’s March 31, 2026 release says its DDTL 4.0 facility received A3 and A (low) ratings and identifies CoreWeave Compute Acquisition Co. VIII, LLC as the borrower whose assets secure the facility. CoreWeave announcement. This is evidence about that financing structure. It is not a general investment-grade rating for every CoreWeave obligation, a rating of Applied Digital, or proof that the tenant can never default. The rating perimeter has to travel with the rating.
The unnamed investment-grade tenants support a different part of the contracted portfolio. Their identities are not disclosed in the issuer documents cited here. A company description of credit quality is relevant, but readers cannot independently model a named counterparty’s balance sheet when the name is withheld. That gap remains open; neither a market rumor nor an assumed connection to a prominent AI customer fills it.
Credit protection also works only within the economics of the contract and project. If rent is delayed by the developer’s own failure to complete, strong tenant credit does not create immediate revenue. If a service failure triggers credits or remedies, the headline lease value does not measure the resulting cash reduction. A useful assessment follows the actual obligor, guarantees, performance conditions and completion status; the adjective attached to the customer cannot replace that work.
Applied Digital reported US$611.311 million of FY2026 consolidated revenue, compared with US$228.569 million in FY2025, for the years ended May 31, in its July 29, 2026 annual report. Annual report. The expansion is substantial. Its quality becomes clearer when the report’s categories are separated: the FY2026 HPC business generated US$385.304 million, including US$270.602 million of tenant fit-out services and US$114.702 million of rental and other revenue, according to the same report. Annual report, revenue and segment notes.
Fit-out work creates revenue while preparing customer installations. It can accelerate as a new building is readied and then decline once that phase is complete. It therefore supports the transition to operating capacity but does not provide the same recurring profile as rent on a completed facility. The FY2026 annual report records US$258.147 million of costs associated with US$270.602 million of fit-out revenue, for the year ended May 31, 2026. Annual report. The difference is a calculated US$12.455 million, before other corporate costs, using those annual figures. Calculation from annual report.
Base rent is a narrower and more informative recurring measure. The July 27, 2026 results identify FY2026 base rent of US$99.811 million; rental and other revenue also includes operating-cost recovery. Results. A dollar of recovered power expense can raise reported revenue without creating the same economic contribution as a dollar of contractual base rent. That distinction helps explain why headline growth and rental economics can move at different speeds.
The sequential comparison is particularly revealing. For the quarter ended May 31, 2026, the July 27 release reports consolidated revenue of US$258.748 million, versus US$126.637 million for the quarter ended February 28, 2026 in the April 8 quarterly filing. Results Quarterly report. However, the results release attributes approximately US$152.4 million of May-quarter revenue to fit-outs, while the February-quarter discussion identifies approximately US$18.9 million from that activity. Results Quarterly report. Much of the sequential increase reflects installation work.
The same sources show why that distinction changes the conclusion: May-quarter base rent was US$44.062 million, in the July 27, 2026 results, while the April 8 quarterly report describes approximately US$44.1 million for the February quarter. Results Quarterly report. The consolidated revenue leap therefore is not a comparable leap in recurring rent. The later operating-capacity delivery belongs to the subsequent period and should be evaluated in the next reported rental figures.
The remaining revenue also matters. FY2026 included US$71.604 million from ChronoScale, according to the May 31, 2026 annual accounts. Annual report, segment note. A meaningful comparison consistently includes or excludes that business and retains the reporting treatment applied in the current audited statements. The next release can improve the recurring mix even if total revenue grows less quickly, because the completion of fit-out work can remove a large temporary contribution while leaving a larger operating rental base.
Update with the fiscal first quarter of 2027 (quarter ended August 31, 2026). Total revenue was $341.9 million, against $80.9 million a year earlier. HPC Hosting produced $262.6 million: $65.8 million of base rent, $183.5 million of tenant fit-out services and $13.3 million of tenant recoveries, with segment operating profit of $33.4 million. Data Center Hosting produced $37.8 million, with Jamestown and Ellendale operating at full capacity, and ChronoScale $41.5 million. The split confirms the point made above: most of the quarter’s HPC revenue is still fit-out work rather than recurring rent. Polaris Forge 1 reached 250 MW in service on October 1, and the company expects 300 MW of delivered critical IT load across its North Dakota campuses by the end of calendar 2026. It reports leases for about 1.41 GW of critical IT load across five campuses. Source
The annual accounts report an operating loss of US$236.462 million for FY2026, compared with US$72.175 million for FY2025, for the years ended May 31, in the July 29, 2026 filing. Annual report. Revenue growth therefore did not produce GAAP operating profitability. Selling, general and administrative expense increased to US$332.096 million from US$107.877 million in those same annual accounts. Annual report. The company is building a much larger operation while absorbing substantial compensation and transaction-related expenses.
Common shareholders also need the correct loss perimeter. For the year ended May 31, 2026, the annual report shows US$183.319 million of consolidated net loss from continuing operations, but US$249.243 million of continuing loss attributable to common holders after the allocations and preferred dividends shown in the statement. Annual report. The difference is not an additional cash payment of that exact amount. It is the accounting allocation determining which portion of the consolidated outcome belongs to ordinary equity.
Management’s adjusted measures tell a narrower story. The July 27, 2026 release reports FY2026 adjusted revenue of US$539.707 million and adjusted EBITDA of US$107.229 million, excluding ChronoScale and applying the disclosed adjustments. Results. A reader cannot compare adjusted EBITDA directly with GAAP consolidated revenue and assume both describe precisely the same businesses and costs. The reconciliation, rather than the favorable label, defines the measure.
Equity compensation is a major bridge item. For FY2026, the July 27, 2026 results reconciliation adds back US$219.289 million of stock compensation within the core-business perimeter. Results. That can be useful for assessing near-term cash requirements because equity awards do not consume cash like ordinary payroll at grant. Nevertheless, they transfer economic value and may enlarge the eventual share count. An adjusted margin that excludes them does not answer the common shareholder’s question about cost per unit of ownership.
The rental NOI margin has an even more specific denominator. In the July 27, 2026 results, FY2026 NOI is US$90.388 million against US$99.811 million of base rent, with the company showing a rounded margin of 91%. Results, NOI reconciliation. The reconciliation deducts identified property operating items from base rent; it is not a margin on all consolidated revenue, and it does not deduct every construction, financing, depreciation or corporate cost. A high property margin and a consolidated operating loss can therefore both be accurate.
The latest reported quarter reinforces the need to keep both views. The July 27, 2026 release reports a US$124.820 million GAAP operating loss for the quarter ended May 31, 2026, alongside US$42.351 million of adjusted EBITDA. Results. The infrastructure operation is gaining scale, but the evidence has not established a self-financing, profitable common-equity business. The next quarter will show the direction of rent, corporate cost, equity compensation and cash together, which says more about the entire company than any single favorable measure.
The May 31, 2026 annual balance sheet reports US$1,591.988 million of cash and equivalents, plus US$2,381.027 million of current restricted cash and US$180.415 million of other restricted cash. Annual report. Adding the restricted categories gives a calculated US$2,561.442 million of restricted cash, using the May 31, 2026 figures. Calculation from annual report. The cash-flow statement reconciles total cash, equivalents and restricted cash to US$4,153.430 million at May 31, 2026. Annual report.
The total is not a single discretionary treasury account. Funds can be associated with construction, lender controls, escrow conditions or specific project uses. Cash restricted to a project helps fund that project but is not necessarily available for a new development, ordinary parent expenses or a distribution. Conversely, restriction does not mean that the money has disappeared. The practical question is which obligations the funds can satisfy and what conditions apply before their use.
The annual operating cash figure is positive: the July 29, 2026 filing reports US$89.685 million of operating cash generated in FY2026, compared with US$115.402 million used in FY2025. Annual report, cash-flow statement. This is progress in the reported operating bridge. It is not sufficient to finance the buildout. The same statement reports US$2,865.765 million of cash spent on property, equipment and other assets during FY2026. Annual report. Subtracting that line from operating cash gives a calculated deficit of US$2,776.080 million for FY2026; this is a simple analytical subtraction, not management’s defined free-cash-flow measure. Calculation from annual report.
The operating bridge itself needs interpretation. The FY2026 cash-flow statement adds back US$220.135 million of stock compensation and includes a US$106.223 million positive movement in accrued liabilities, for the year ended May 31, 2026. Annual report. Noncash compensation explains why losses and cash differ; accrued liabilities can reflect an interval between expense recognition and payment. Neither item establishes that the same cash contribution will recur indefinitely.
Funding supplied the difference. The annual report records US$6,876.826 million of net financing inflows during FY2026. Annual report, May 31, 2026 cash-flow statement. Debt and equity issuance and outside project investment explain the ability to invest and grow cash despite a large construction requirement. That is normal financing activity for a developer, but its cost and priority are part of the investment economics. A growing cash balance financed by senior claims is not equivalent to cash retained from mature operating profits.
A simple cash-divided-by-loss runway would be misleading here. Construction cash is lumpy, project funds are restricted, and future rent and borrowing depend on delivery and contractual conditions. The next accounts need to show the remaining cash by category, the remaining build requirements, payments due and newly available funding. The gap between those items, rather than a generic number of months, will show whether financing flexibility is improving or deteriorating.
Update at August 31, 2026. The quarterly report shows cash and cash equivalents of $2,949.9 million, current restricted cash of $313.4 million and $414.6 million of restricted cash in other assets, for a total of $3,677.9 million, against $4,153.4 million at May 31, 2026 on the same basis. The release describes this as $3.7 billion of cash, cash equivalents and restricted cash alongside $6.4 billion of debt. Interest paid in the quarter was $242.9 million. During the quarter the company closed $1.59 billion of 7.000% senior secured notes due 2031, issued at par to fund Building 3 at Polaris Forge 1 and repay a $300 million bridge facility. Source
As of May 31, 2026, the annual report’s debt note shows US$5,306.680 million of gross scheduled principal and US$4,975.938 million of carrying debt, after deferred costs and discounts. Annual report, debt note. These are different accounting descriptions of the same capital structure, not competing estimates of cash owed. The carrying amount should not replace principal when assessing repayment needs, while subtracting the restricted-cash headline from debt would overstate the cash freely available to repay it.
Project notes provide much of the funding. The July 29, 2026 annual report describes the US$2.35 billion issue carrying a 9.25% coupon and maturing December 15, 2030, and the US$2.15 billion issue carrying a 6.75% coupon and maturing March 15, 2031. Annual report. Coupons are only part of the economics: issue discounts, transaction costs, amortization, reserve requirements and collateral also matter. A project funded at a lower coupon is favorable evidence, but it does not make every later project financeable on identical terms.
The subsequent-events note updates the maturity picture. A US$300 million bridge outstanding at May 31, 2026 was refinanced with US$1.590 billion of 7.0% notes due June 15, 2031, issued on June 16, 2026, according to the annual report. Annual report, debt and subsequent-events notes. The bridge and replacement financing should not both be counted as continuing obligations. Equally, the new issue should not be inserted into a reconstructed current balance sheet without all of the other quarter’s movements.
Available commitment also differs from cash drawn. The annual report describes US$430 million of revolving commitments following the June 26, 2026 expansion, with a further US$120 million conditional accordion. Annual report, subsequent events. The conditional addition is not already committed cash. Letters of credit, collateral and financial covenants affect usable headroom, so the maximum advertised facility size is not automatically the amount the company can spend on its next construction bill.
Interest recognition can obscure the economic burden during a buildout. The May 31, 2026 annual accounts show US$29.516 million of net interest expense, reflecting both expense and interest earned on cash, while the notes disclose capitalized interest and the cash-flow supplement shows US$263.402 million of cash interest paid during FY2026. Annual report. These amounts describe different timing and accounting categories. The small net expense is not the full recurring cash coupon requirement on the expanded debt structure.
Project borrowing also does not mean that the parent has no exposure. The annual disclosures describe completion support and other guarantees alongside subsidiary borrowing. Cost overruns or failure to achieve completion can therefore create a funding need beyond the ordinary operating budget. For common holders, the decisive question is whether completed facilities generate cash after these financing obligations, with enough remaining to support later investment or reduce reliance on additional equity.
Macquarie-related capital finances the development through a structure that includes both preferred and common project interests. The May 31, 2026 annual report records US$1.825 billion funded across the disclosed TopCo 2 closings, and a 13.5% fully diluted common interest for the outside investor, alongside preferred units. Annual report, redeemable noncontrolling-interest note. That common percentage alone does not summarize the economic claim. The preferred instrument has its own accrual, redemption and priority terms.
According to the annual report filed July 29, 2026, the preferred units accrue a 12.75% annual dividend, compounded semiannually, with payment in cash or in kind available through October 6, 2035, subject to the documented terms. Annual report. Paying in kind conserves immediate cash but increases the claim. The report also describes future rate adjustments and trigger provisions. It is therefore inappropriate to describe the capital as permanently costless because distributions can initially be deferred.
Redemption economics matter as well. The July 29, 2026 annual report describes a minimum 1.8-times multiple of invested capital, inclusive of the common interest, and a 2.0-times minimum in specified IPO or liquid-sale circumstances, with redemption rights beginning April 6, 2028 and additional time-dependent terms. Annual report. These are contractual provisions rather than a predicted investor return or a present valuation of the subsidiary. They explain why the amount available to common owners can differ greatly from consolidated asset growth.
The waterfall first addresses specified investor losses and unpaid preferred dividends, then the preferred liquidation amount, before the residual distribution to common project interests. This ordering, described in the annual report’s May 31, 2026 note, makes a flat reduction based solely on minority common ownership an inadequate model. Annual report. Cash reaching the project’s common tier has already passed through obligations whose amount and timing evolve with the preferred instrument.
The balance sheet reflects those priorities. The annual report shows a US$1,956.303 million redeemable noncontrolling-interest carrying amount at May 31, 2026, outside ordinary equity. Annual report. That carrying amount is not a second cash balance and is not an amount distributable to APLD common holders. It incorporates the accounting for capital whose redemption rights are not entirely within the company’s control, as well as the required allocations and valuation features.
This financing can enable development that otherwise would be unavailable or require more parent-level issuance. Its benefit should therefore be evaluated against its full price rather than dismissed merely because another investor receives priority. The test is whether the project’s operating return and eventual residual justify the cost, risk and obligations assumed. Capacity growth is useful evidence of execution; the waterfall determines how much of the successful execution is economically attributable to the ordinary share.
The latest official common-share denominator Merlintrader has found is 302,321,687 shares outstanding on September 23, 2026, disclosed in the September 25 prospectus. Prospectus. The annual report shows 287,883,603 outstanding on May 31, 2026. Annual report. Finviz data as of September 30, 2026 still show approximately 287.88 million shares; the later official share count takes precedence over that figure. Finviz. Different dates can explain a discrepancy, but the discrepancy is stated explicitly.
The September 25, 2026 resale prospectus covers 53,087,689 common shares, comprising 50,087,689 associated with Series G conversion and 3,000,000 associated with bridge warrants. Prospectus. Covered shares are not all newly issued on the registration date, and a registration is not proof that every covered security has been sold into the market. The document includes a mixture of previously available shares and additional shares that can become issuable under its terms.
Series G is also a source of issuer financing before the resale stage. The September 25, 2026 prospectus reports US$1.165 billion of cumulative gross preferred proceeds, a US$2.0 billion aggregate commitment following the June 26 amendment, and US$835 million remaining issuable under that commitment. Prospectus. These are dated financing disclosures rather than a current unrestricted cash balance. Proceeds from selling holders’ common-share resales go to those holders; they are distinct from the money Applied Digital received when it issued the preferred security.
The conversion mechanics connect financing flexibility to common ownership. The September 25, 2026 prospectus describes a conversion based on 95% of the lowest daily VWAP during the preceding five trading days, subject to an initial US$34.00 floor that can be adjusted but not below US$4.48 under the stated terms. Prospectus. The initial floor is not permanent protection against dilution. Under specified conditions, a conditional conversion notice can lead the issuer to lower the floor or choose the documented cash-redemption route.
The prospectus’s September 25, 2026 example calculates 24,558,823 additional common shares from the remaining US$835 million using the US$34.00 initial floor. Prospectus. It is explicitly an illustration, not the final number of shares that will necessarily be issued. A lower permitted conversion price changes the denominator, while redemption creates a different cash obligation. The same document reports that preferred conversion had already produced approximately 60.6 million common shares cumulatively by September 25, 2026. Prospectus.
The complete potential ownership change is not obtained by adding every warrant, restricted award, convertible-note share and registered resale share without checking overlap. Some categories refer to the same underlying shares; others remain conditional. The investment question is how financing choices and earned compensation affect the ordinary shareholder’s proportionate claim as the operating business grows. GAAP diluted shares during a loss period can exclude instruments as antidilutive while those instruments remain economically relevant to future ownership.
ChronoScale’s separate public listing gives visibility to the cloud business but does not make its relationship with Applied Digital disappear. The September 25, 2026 proxy describes approximately 96% ownership, while the May 31, 2026 accounts continue to consolidate the controlled activity and the results release excludes it from specified core non-GAAP measures. Proxy Annual report Results. The accounting perimeter and management’s analytical perimeter are most informative side by side.
Funding remains a relevant connection. The September 25, 2026 proxy describes a ChronoScale lending arrangement with up to US$100 million of capacity and reports a US$7 million draw on July 1, 2026, with the stated limits on demanding repayment before August 20, 2027. Proxy. A loan limit is not the amount already advanced. Nor should an investor assume that cash in a separately listed subsidiary can be freely moved to the parent without regard to agreements, creditor interests and minority ownership.
Base Electron requires an even more careful boundary. The September 25, 2026 proxy describes Applied Digital’s 10% interest and personal ownership or management participation by certain executives. Proxy. It is a related-party power-development opportunity, rather than simply another wholly owned operating campus. The annual report treats it as an unconsolidated variable-interest entity because Applied Digital is not its primary beneficiary for the stated accounting purpose. Annual report, May 31, 2026 VIE note.
A material old exposure has changed. The annual report says the prior Babcock & Wilcox guarantee was terminated on May 29, 2026, with Applied Digital paying US$37 million on Base Electron’s behalf in connection with the disclosed transaction. Annual report. The old guarantee is no longer in force and is not part of the current risk picture. Removing that obsolete item, however, does not eliminate the related-party lending and investment exposure that continues to be disclosed.
The latest proxy supplies an updated lending figure: Base Electron’s loan balance was US$59.2 million on September 1, 2026, against a stated maximum of US$100 million. Proxy filed September 25, 2026. The balance-sheet-date amount and the facility maximum are not substitutes for that later outstanding balance. The proposed power plant remains a development plan, and is not yet operating electrical capacity supporting current rental cash flow.
Related-party activity is not automatically misconduct, but it changes the questions ordinary shareholders need answered. Who approves the terms? What collateral, pricing and repayment rights apply? Does the investment solve a documented infrastructure constraint for Applied Digital, or principally fund another entity’s growth? Future disclosure of repayment, independent approval and operating milestones would provide stronger evidence than simply repeating the strategic narrative. The direction and limits of capital moving outside the parent are part of the infrastructure company’s financial robustness.
The current management team described in the September 25, 2026 proxy includes Wes Cummins as chief executive, Jason Zhang as president, Saidal Mohmand as chief financial officer and Laura Laltrello as chief operating officer. Proxy. This matters when following accountability for capital decisions: historical releases naming former executives should not be silently carried into a current management description. Construction delivery and financing require coordination, while the compensation structure determines how management shares in the resulting growth.
Stock compensation remains substantial beyond the cash-flow add-back. The May 31, 2026 annual report discloses unrecognized restricted-stock-unit expense of approximately US$144 million over 2.6 years and performance-stock-unit expense of approximately US$135.1 million over 2.5 years. Annual report, compensation note. These are estimates of expense recognition, not a promise of a fixed cash payment schedule. Vesting, service and performance conditions still matter, as does the number of shares eventually delivered.
Ownership provides useful but dated context. The September 25, 2026 proxy’s table, measured on September 16, 2026, reports Cummins at 7.8% and the listed current directors and officers together at 9.5%. Proxy. Its footnote identifies 17,590,238 common shares pledged to secure a JPMorgan credit line as of September 16, 2026. Proxy. Pledged ownership can create collateral-related exposure; the disclosure does not establish that a forced sale has occurred or predict that one will occur.
Financial-control disclosures should be stated with the same precision. Management and the auditor report effective internal control at May 31, 2026, with the annual report identifying remediation of the previously disclosed complex-instrument weakness by August 31, 2025. Annual report, controls and auditor reports. Reasonable assurance is not a guarantee that future accounting errors are impossible. The newly acquired Ekso business was excluded from the stated internal-control assessment under the acquisition exception described in the report, so the conclusion does not extend beyond its disclosed scope.
The annual report also gives the current disclosed posture of the securities litigation. In the McConnell matter, the court stayed and administratively closed the case on September 8, 2025 pending resolution of the dismissal motion, according to the July 29, 2026 annual filing. Annual report, contingencies note. Administrative closure in that context is not a final merits victory. The Weich derivative claims were dismissed without prejudice on June 5, 2024, with the annual report describing the possibility of seeking an amended complaint. Annual report.
The company says it cannot estimate a loss range for the disclosed proceedings in the May 31, 2026 note. Annual report. That statement is neither a quantified liability nor confirmation of zero risk. The same discipline applies to governance: an issuer’s controls conclusion, ownership table or strategic explanation answers a particular question at a particular date. Ordinary holders should assess whether future reporting shows consistent accountability for delivery, funding terms and the cost of compensation.
The principal bottleneck is the conversion of secured demand into dependable operating infrastructure. The annual report filed July 29, 2026 identifies risks involving contractors, specialized electrical equipment, permits, utility connections, construction budgets and power availability. Annual report, risk factors. These risks are connected rather than independent checklist items. A delayed transformer can affect energization, acceptance, rent commencement and the amount of financing required before revenue begins.
The power pipeline gained a first site abroad on October 6, 2026. Applied Digital announced an agreement giving it access to up to 1 GW of potential power capacity in Finland, where it plans an AI Factory campus capable of scaling to as much as 1 GW, with initial power availability anticipated beginning in 2028. The announcement does not disclose the counterparty, the cost or the site within Finland; it says the agreement was structured to limit initial exposure and that future investment decisions are tied to customer demand, commercial milestones and regulatory and development requirements. Marketing to hyperscale customers has begun, but no tenant has been named. Source → The chief executive called it a deliberate first step, with near-term execution still centred on the U.S. portfolio.
Management’s cooling and construction approach may help differentiate its facilities, but company claims of efficiency are not independently proven economic superiority. Cooling suitability must match the customer’s equipment, electrical design and required reliability. A water-related advantage does not remove dependence on grid power, network connectivity, service obligations or capital. Evidence of a durable advantage would include repeated delivery, competitive total cost and acceptable returns after the full financing structure.
The current market observations provide a separate price context. Finviz data as of September 30, 2026 show US$24.37 per share, US$7,288.93 million of market capitalization, a 269.89 million float and 21.44% short float. Finviz. These are dated third-party figures rather than an audited capital table. Because of the later official share denominator discussed above, the third-party capitalization and share count shown do not give an exact current valuation unless their dates and definitions are aligned.
A price-to-sales ratio also needs an economic denominator. Total revenue includes installation services, cryptocurrency hosting and consolidated cloud activity; a contractual multi-year lease value is not present revenue. Enterprise value must account for financing claims, restricted cash and project interests on a consistent basis. The purpose of these distinctions is to prevent a numerical comparison from implying that the common shareholder owns the entire future lease stream free of costs or competing claims. Merlintrader does not assign a target price or recommend a transaction.
The September 28, 2026 notice set the reporting checkpoint, and results for the quarter ended August 31, 2026 were released on October 7, 2026 after market close, with the conference call at 5:00 p.m. Eastern time. Conference-call notice · Earnings release. The next date on the company calendar is the November 4, 2026 annual meeting; the date of the next quarterly release had not been announced as of October 8, 2026.
The useful questions are specific. How did the additional live phase affect recurring base rent? How much fit-out activity remained? Where did unrestricted and restricted cash move? What construction payments, new debt and preferred conversions occurred? Did management change a campus delivery window, and what explains the change? The answers will determine whether the larger contracted portfolio is converting into an increasingly robust operating business and a stronger residual for ordinary shareholders. Until then, the documented achievements and the outstanding development obligations both remain part of the analysis.
Financial statements use US GAAP and US dollars. Finviz figures are as of the stated date. Calculations, non-GAAP measures, company claims and editorial interpretations are identified in the text.
Historical context, superseded where indicated by the October update: No. The July 27, 2026 results describe a much larger contracted portfolio than the capacity in service. The July 1, 2026 announcement reports 175 MW live at Polaris Forge 1. Other phases still need construction, power and customer acceptance. Contracted load, live load and a development pipeline describe different stages. Results Delivery announcement. Source.
Current status: Applied Digital’s October 2, 2026 release reports another 75 MW of critical IT load ready for service at Polaris Forge 1 in Ellendale, North Dakota. The delivery comprises three 25 MW data halls in the second phase of Building 2. That building now has its full 150 MW in service, and the campus total is 250 MW. The July milestone of 175 MW remains valid as history; it is no longer the current operating-capacity figure. Primary source
No. For the quarter ended May 31, 2026, the July 27 release identifies a large contribution from tenant fit-out work. The preceding February-quarter filing provides the comparison. Base rent is the recurring category to follow, while installation services and cost recoveries can materially change consolidated growth without an equivalent change in rental economics. Results Quarterly report. Source.
No. The May 31, 2026 accounts distinguish cash and equivalents from current and other restricted cash. Project funds can support construction but remain subject to their documented restrictions. An assessment of funding needs must match those balances to their permitted uses and obligations, rather than treating total reconciled cash as a discretionary treasury balance. Annual report. Source.
Selling holders receive the proceeds of their common-share resales under the September 25, 2026 prospectus. Applied Digital separately received financing when it issued Series G preferred stock. The registration can cover previously available and conditionally issuable shares; it is not proof of an immediate sale of every covered security or a matching new issuer cash inflow. Prospectus. Source.
Separate listing does not itself remove consolidation. The September 25, 2026 proxy describes the continuing controlling ownership, and the May 31 annual accounts include the controlled business. Certain core non-GAAP measures exclude it, which changes the analytical perimeter but not the GAAP treatment described in those accounts. Proxy Annual report. Source.
First-quarter FY2027 results, for the period ended August 31, 2026, were released on October 7, 2026 after market close, with the call at 5:00 p.m. Eastern time, as the September 28, 2026 issuer notice had scheduled. The next date on the company calendar is the annual meeting of November 4, 2026; the date of the next quarterly release had not been announced as of October 8, 2026. Earnings release. Conference-call notice. Source.
Every Merlintrader stock hub, catalyst update and market brief is published to Telegram the moment it goes live. No paywall, no spam, just the research.
Disclaimer. This content is published by Merlintrader for educational and informational purposes only. It is independent journalism and research. It does not constitute investment advice, an investment recommendation, an offer or a solicitation to buy or sell any security, and it is not a research report within the meaning of applicable United States securities regulation. Nothing here should be read as a recommendation to buy, sell or hold $APLD or any other security.
Figures are taken from public filings with the U.S. Securities and Exchange Commission, company press releases and market-data providers, and are stated with their reference dates. Data can change without notice, and figures published before a results release become outdated the moment that release is issued. Merlintrader makes no representation that the information is complete or current at the time of reading. Readers should verify every figure against the primary source before acting on it.
Data-center developers carry construction, customer, energy-supply and financing risks. Delays, cost overruns, customer concentration and financing conditions can affect delivery and cash available to shareholders. Contracted capacity and announced lease values do not guarantee cash distributions or investment returns. Additional debt or equity financing can increase obligations or dilute existing shareholders. Investors can lose some or all of their capital. Every reader is responsible for their own decisions and should consult a licensed financial adviser where appropriate.
Merlintrader may hold positions in securities mentioned. Some links on this page are affiliate or referral links, including those to Finviz and Stocktwits, which may generate a commission at no cost to the reader. Full legal information is available on the disclaimer and terms of use and privacy pages.
Conferences, industry summits, government-facing events and company watchpoints across the sector, in one free calendar.
Open the Space, Defense & AI Event Calendar →
