Applied Digital ($APLD) Stock Hub 2026: 1.41 GW of AI Data Centers, $36 Billion of Lease Value—and the Funding Test

01 The central question: can APLD convert contract value into common-equity value?

Applied Digital has already crossed the commercial threshold that stops many data-center developers: it has signed long-term leases for roughly 1.41 GW of critical IT load. The portfolio spans five named campuses and carries approximately $36.2 billion of nominal revenue over the initial lease terms. That is real contractual evidence, not a non-binding pipeline slide.

But the equity thesis starts where the headline ends. At June 30, only 175 MW was operational. Roughly 1,235 MW remained to be delivered, a derived figure equal to 1,410 MW less 175 MW. Building that capacity requires billions of dollars before most of the lease payments arrive. The company has funded the build with secured notes, convertible preferred stock, common equity, warrants, project-level preferred capital and noncontrolling interests. The company can therefore grow rapidly while value per common share grows more slowly—or not at all.

Underwriting status: watchlist / preliminary. Evidence confidence is high for filed contracts, reported financials and capital instruments. It is lower for future delivery dates, the remaining unnamed tenant’s credit quality and eventual project returns. A precise price target would imply a level of fully diluted, project-by-project modelling that the public disclosures do not yet support.

02 What Applied Digital actually does

Applied Digital designs, develops, owns and operates large-scale data centers engineered for high-performance computing workloads, including artificial intelligence, machine learning and other accelerated computing. The company supplies the powered shell, cooling, electrical and physical infrastructure into which tenants install or operate dense compute equipment.

ChronoScale complicates the picture. Applied Digital separated its historic cloud business into a separately traded company in May 2026, but still owned approximately 96% at the July results update and continued to consolidate it. Management excludes ChronoScale from its adjusted revenue and adjusted EBITDA, while GAAP results still include it.

The long-run corporate direction is clear: management wants the HPC and legacy hosting segments to represent the core platform and describes a transition toward a pure-play data-center model. The accounting has not fully reached that destination.

03 The five-campus contracted portfolio

The table uses the portfolio presentation in the FY2026 Form 10-K and cross-checks each project against the related lease and financing filings. The delivery windows are management estimates, not completed milestones. The 10-K keeps Polaris Forge 2 anonymous, but the March 10 secured-note Form 8-K identifies its tenant as Oracle. “High investment-grade” remains the issuer’s description for the one tenant whose identity is still undisclosed; readers should not substitute Microsoft, Amazon, Google or Meta.

04 175 MW live versus 1,410 MW contracted

The cleanest way to understand APLD is to separate commercial proof from operating proof. Executed leases demonstrate demand. Energized buildings demonstrate execution. Cash rent demonstrates economic conversion.

The first 100 MW data center at Polaris Forge 1 became operational in October 2025. Phase 1 of the second building added 75 MW on June 30, 2026, taking the campus to 175 MW live. The remaining capacity ranges from buildings already under construction to campuses with delivery windows extending into the second half of 2028.

This gap is why the stock cannot be evaluated from lease value alone. Construction delays, unavailable labor or equipment, permitting, utility interconnection, geological problems and site readiness can all move ready-for-service dates. The 10-K explicitly states that, under certain circumstances, lessees may terminate applicable leases if construction is significantly delayed.

05 What the $36 billion lease figure means—and what it does not

The Form 10-K presents approximately $36.2 billion of total contracted revenue over the initial terms. The lease note gives a more precise schedule of $35.845 billion of minimum contracted payments. The difference is largely the result of rounding and presentation. Neither number should be described as revenue already earned.

The leases are described as take-or-pay and non-cancellable for convenience, with a convenience termination requiring payment of the remaining contractual value. That protection is meaningful. It is not absolute. The risk factors and CoreWeave lease filings identify circumstances in which failure to meet specified installation or delivery requirements can permit termination without a convenience termination fee.

The company also cites approximately $86 billion if every renewal option is exercised. That is optional future value dependent on tenant decisions many years from now. It belongs in an upside discussion, not in the base contracted-revenue figure.

06 Revenue quality: Q4 growth was mostly tenant fit-out

Fiscal fourth-quarter revenue of $258.7 million and adjusted EBITDA of $42.4 million look like a sharp operating inflection. The composition matters more than the headline.

For the full fiscal year, HPC Hosting generated $385.3 million of revenue: $270.6 million of tenant fit-out services and $114.7 million of rental and other revenue. The rental line consisted of $99.8 million of base rent and $14.9 million of tenant recoveries. The cost of tenant fit-out services was approximately $258.1 million.

This does not make fit-out revenue illegitimate. It does mean total revenue can rise faster than the underlying rent-producing asset base. The clean recurring indicator is base rent per quarter, supported by live MW and reconciled with segment profit, interest and capital spending.

07 Fiscal 2026 financial baseline

Reported earnings contain unusually large moving pieces. Fiscal 2026 included a $59.7 million loss on classification as held for sale, $75.8 million of gains on derivatives and $10.8 million of gains on investments. Interest expense was partly offset by interest income on large construction cash balances. A clean reading therefore requires the GAAP statement, the segment table, the cash-flow statement and the non-GAAP reconciliation together.

08 Cash flow and capex: the operating story is financed before it is harvested

At May 31 the balance sheet showed $1.592 billion of unrestricted cash and approximately $2.561 billion of restricted cash, including long-term restricted amounts. The restricted balance is largely tied to construction, debt service or letters of credit. Subtracting all $4.153 billion from debt to claim a simple “net debt” figure would overstate liquidity available to common shareholders.

Applied Digital states that it expects to need substantial additional capital for growth. That statement is consistent with the scale of the build rather than evidence of imminent distress, but it creates a permanent underwriting question: what instrument funds each next dollar, and which claim receives the project economics first?

09 Debt and project-level capital: not one simple balance-sheet number

The May 31 contractual debt schedule showed $5.307 billion of principal and an estimated $1.785 billion of interest payments. It also concentrated $4.195 billion of principal in fiscal 2031. The June $1.59 billion issuance changed the structure after the balance-sheet date, so adding it mechanically to the May debt figure would be wrong: $300 million refinanced the bridge and the remaining proceeds are earmarked for construction.

A derived coupon check illustrates the scale. The four large note series—$2.35 billion at 9.25%, $2.15 billion at 6.75%, $1.59 billion at 7.0% and $450 million at 2.75%—carry roughly $486 million of annual stated coupon before smaller facilities, fees and amortization. That is not a forecast of consolidated net interest expense: project cash earns interest, some construction interest is capitalized, and legal borrowers differ. It is a reminder that recurring property cash flow must become very large.

The Macquarie layer

At May 31, an affiliate of Macquarie Asset Management had funded $1.825 billion of preferred units in APLD HPC TopCo 2 and held 13.5% of its fully diluted common equity; APLD held 86.5%. The balance sheet reported $1.956 billion of redeemable noncontrolling interest, including accrued PIK economics. The preferred return begins at 12.75% a year and the contractual liquidation framework includes a minimum 1.80x multiple of invested capital, with step-ups and redemption or sale-process rights under specified future conditions. On $1.825 billion funded, 12.75% is roughly $232.7 million of annualized preferred return by arithmetic. It is not GAAP interest expense, but it is an economically senior project-level claim before the residual common value.

10 Dilution: the share count has already moved materially

Applied Digital had 287.884 million common shares outstanding at May 31, 2026, up from 224.910 million one year earlier—an increase of about 28%. The Form 10-K cover reported 291.469 million shares on July 28. The company also increased authorized common shares to 600 million in November 2025.

The PEPA commitment was increased to $2.0 billion, giving the company additional funding flexibility through Series G preferred issuance. Flexibility has value for a capital-intensive developer; it also means investors should track the fully diluted share count, not only basic EPS or the headline market capitalization.

Post-10-K ownership update. Four Form 4 filings made on August 4 disclosed the July 31 vesting of 3.045 million performance stock units across the CEO, president, COO and CFO. A combined 1.223 million shares were withheld for taxes, leaving approximately 1.822 million net shares delivered to those officers—a derived figure, not a newly reported company-wide share count. The filings describe the withheld shares as tax settlement rather than open-market sales. Consequently, the 291.469 million shares outstanding reported for July 28 remain the latest issuer-wide baseline used here, but should not be interpreted as a live fully diluted count.

At the August 28 market snapshot, the warrants originally issued with the CoreWeave leases were above their stated exercise prices, but a single “fully diluted” total would still require assumptions about exercise method, the other warrants, capped-call protection on the convertible notes, award vesting and Series G conversion pricing. The filed 291.5 million basic shares should therefore be read alongside the 28.1 million warrants, 22.352 million unvested restricted and performance units, convertible notes and remaining preferred stock—not replaced by a falsely precise sum.

This is an exposure map, not an instruction to add every instrument one-for-one. Treasury-stock treatment can reduce warrant dilution, performance awards may not vest, capped calls can offset some convertible dilution and preferred conversion pricing can vary. Ignoring the instruments would be misleading; treating all of them as immediately outstanding would be misleading too.

11 Customer concentration and CoreWeave-specific exposure

During FY2026, one HPC customer accounted for 59% of continuing-operations revenue. The legacy hosting customer accounted for 25%. The first figure largely reflects the early Polaris Forge 1 ramp, before Oracle and the remaining hyperscaler begin contributing, but it shows how concentrated the current income statement remains.

CoreWeave is one of the two named HPC tenants. Its three Polaris Forge 1 leases cover 400 MW and approximately $11 billion of initial-term value. Warrants originally issued in connection with those leases covered up to 21.456 million APLD shares before the disclosed 300-share cashless exercise, but subsequent assignments moved the warrant interests to financial counterparties. During March 2026, portions of the lease structure moved to a CoreWeave subsidiary, supported by springing guarantees and, for one arrangement, a $50 million letter-of-credit requirement. A memorandum concerning the Building 4 lease contemplated assignment to a subsidiary if it obtains an investment-grade rating; a conditional memorandum is not a completed credit upgrade.

Oracle is identified as the Polaris Forge 2 tenant in the March 10 financing filing. The third HPC tenant, covering Delta Forge 1, Polaris Forge 3 and Delta Forge 2, remains unnamed. Applied Digital says approximately 70% of contracted revenue is backed by U.S. investment-grade hyperscalers. That credit description is useful but remains issuer-reported, and investors cannot independently analyze the undisclosed tenant’s financial statements, lease obligations or strategic commitment.

12 ChronoScale: legally separate, still consolidated

On May 5, 2026, Applied Digital completed a transaction that combined its cloud business with Ekso Bionics, renamed ChronoScale and listed the resulting company on Nasdaq under ticker CHRN. Applied Digital owned approximately 97% immediately after closing and approximately 96% in the July results release.

ChronoScale is therefore an independent publicly traded company in legal and market terms, but APLD remains its controlling shareholder and consolidates it under GAAP. Management excludes ChronoScale from the adjusted revenue and adjusted EBITDA used to describe core data-center performance.

The appropriate monitoring questions are whether APLD reduces its stake, whether ChronoScale can fund itself without APLD support, and how the holding is treated in any sum-of-the-parts valuation.

13 The legacy crypto-hosting business still matters

The Data Center Hosting Business operates 106 MW at Jamestown and 180 MW at Ellendale for one crypto-mining customer. Both facilities were at full capacity on May 31, and the remaining contractual term was approximately one and a half years.

FY2026 revenue rose to $154.4 million from $144.2 million, while segment profit fell to $48.3 million from $63.9 million. The segment provided operating income while the HPC platform was being built, but its customer concentration and approaching contract horizon matter. If the customer departs or economics weaken, APLD must renew, replace, repurpose or accept a declining contribution.

This exposure also makes the sector label important. APLD is increasingly an AI infrastructure company, but current consolidated economics are not entirely insulated from digital-asset hosting.

14 The possible moat: power, sites, design and execution—not the word “AI”

The scarce inputs in large-scale AI infrastructure are not only GPUs. They include secured land, utility interconnection, substations, transmission, cooling, fiber, construction capacity and a design that can support high rack density. Applied Digital’s proposition is that its North Dakota and southern U.S. sites can combine these inputs at hyperscale.

The company promotes waterless cooling and a standardized 150 MW building design. Those features may shorten replication and lower water constraints, but they should be evaluated through delivered buildings, tenant acceptance, power usage effectiveness, uptime and construction cost per MW. Marketing descriptions are not substitutes for operational data.

Power figures also require discipline. Campus announcements sometimes cite gross utility power greater than net critical IT load. The contracted table uses critical IT MW; it should not be combined with gross utility pipeline figures. Similarly, the company’s 3 GW active and more than 5 GW extended pipeline are development optionality, not executed leases.

15 Peer map: useful references, not clean valuation comparables

This is why a single peer revenue multiple is weak. APLD combines a developer, a landlord, a legacy crypto host, a controlling stake in a cloud company and multiple project-level financing structures. The right endpoint is stabilized property cash flow attributable to common equity, but the portfolio is still too early for that figure to be observed across most campuses.

16 Management, governance and execution

Wes Cummins is co-founder, chairman and chief executive; Jason Zhang became president and co-founder in January 2026; Saidal Mohmand is chief financial officer; Laura Laltrello is chief operating officer. The team has executed an unusually large sequence of leases and financings in a short period. That is evidence of transaction capability. The next phase demands construction discipline, controls and capital allocation rather than more signed headlines.

An August 6 Form 4 also reported that director Richard Nottenburg sold 75,000 shares on August 4 at a $31.15 weighted-average price. This was an actual open-market sale, unlike the tax-withholding transactions reported by the four officers, and is included as a governance datapoint rather than evidence about near-term operating performance.

Governance deserves attention because capital-market execution is central to the model. The CEO founded 272 Capital, where the CFO also serves as director of research. Several officers and directors have individual interests in Base Electron, an independent power developer. APLD reported a $58.6 million related-party loan receivable from the Base Electron structure at May 31 and said it was not the primary beneficiary and was not contractually required to provide support.

The company remediated its previously reported material weakness relating to complex financial instruments and concluded that internal control over financial reporting was effective at May 31, 2026; the auditor also expressed an effective-control opinion. Newly acquired Ekso/ChronoScale controls were excluded from management’s assessment under permitted guidance. The correct status is therefore remediated, with continuing complexity—not an unresolved material weakness.

17 The result must be measured on explicit time horizons

The primary research horizon for APLD is 18 to 24 months. Shorter windows can validate construction and financing; they cannot prove mature economics. Each horizon needs an observable scorecard.

No exact next earnings date had been announced in the primary-source set used for this Hub. The next quarterly release should be treated as an update point when the company schedules it, not guessed from a third-party calendar.

18 Valuation: why false precision is especially dangerous here

At the August 28 intraday snapshot, APLD’s market-data-provider capitalization was approximately $7.14 billion. The filed July 28 share count multiplied by the same $25.31 price implies roughly $7.38 billion, illustrating that provider share-count conventions and recent conversions can create differences. Neither figure includes the full economic effect of debt, project preferred capital, noncontrolling interests, convertibles or warrants.

A superficial comparison divides the equity value by $611.3 million of FY2026 GAAP revenue and obtains a high revenue multiple. That denominator is not clean: it includes ChronoScale and substantial fit-out revenue. Dividing by $36.2 billion is worse, because the numerator is current equity value while the denominator is fifteen years of nominal lease payments before construction cost, operating cost, interest, partner preferences and taxes.

The underwriting gate is therefore operational: value each building only after a credible cost, financing package, lease commencement and attributable cash-flow path exist. Until then, the disciplined conclusion is a scenario range, not a single target price.

19 The constructive and skeptical cases

20 Scenario framework for the next 18–24 months

These are analytical paths, not forecasts, targets or recommendations.

21 Red flags and thesis-breakers

• A missed ready-for-service date that gives a tenant a contractual termination right.
• A reduction or cancellation of contracted critical IT load, especially at Polaris Forge 1 or across the three-campus second-hyperscaler relationship.
• Quarterly revenue growth without comparable base-rent growth, indicating continued dependence on fit-out accounting.
• Construction cost per MW rising faster than lease economics or material unbudgeted retrofit requirements.
• New capital that is materially more expensive or more senior than the existing structure, or large common issuance without a clearly accretive project return.
• Restricted cash presented as though it were freely available, or a liquidity analysis that ignores project covenants.
• Further concentration in one tenant or deterioration in a counterparty’s credit support.
• ChronoScale requiring support from APLD or creating control and reporting complications without a clear path to value realization.
• Legacy crypto-hosting economics weakening before replacement capacity is secured.
• Fully diluted share growth outpacing recurring cash flow per share.

22 Evergreen monitoring checklist

23 Merlintrader bottom line

Applied Digital is one of the clearest public-market ways to express a high-risk view on the physical build-out behind artificial intelligence. The company has done the hard commercial work: five campuses, 1.41 GW under long-term lease and a payment schedule that could exceed $2.25 billion a year by FY2029 if delivery proceeds. The first 175 MW shows that the model is more than a presentation.

The common share is not a simple claim on $36 billion. It is the residual claim after construction spending, secured debt, interest, project preferred capital, noncontrolling interests, convertible securities, warrants and future operating costs. Only 12.4% of contracted load was live, and 75% of Q4 HPC revenue came from fit-out services. Those two numbers are the reality check on the headline.

That makes APLD promising but not yet cleanly underwritten. The appropriate posture is watchlist/preliminary, with an 18–24 month horizon and hard checkpoints at 3–6 and 12 months. A bullish conclusion should be earned by on-time MW, rising base rent, improving cash interest coverage and stable fully diluted economics—not by another increase in nominal pipeline value.

24 Related Merlintrader research

• Space, Defense & AI Stock Hubs 2026 — the broader infrastructure and strategic-technology directory.
• C3.ai ($AI) Stock Hub — a useful contrast between AI software economics and physical AI infrastructure.
• Dilution, ATMs and PIPEs — how equity and convertible funding affect existing shareholders.
• Free Catalyst Calendar — earnings, delivery windows and market events in one place.