Applied Digital Corporation

What they do

Applied Digital develops purpose-built AI factories—standardized data centers engineered for high-density, liquid-cooled GPU deployments, sized at roughly 150 MW and built in about 14 to 18 months. It leases HPC capacity under long-term arrangements to investment-grade hyperscalers and other compute customers, including CoreWeave at its Polaris Forge 1 campus in Ellendale, North Dakota. A smaller legacy segment hosts blockchain data centers, and the historic cloud services business was separated into ChronoScale Corporation (Nasdaq: CHRN) in May 2026.

Revenue drivers

• HPC Hosting Business — Designs, constructs, owns and operates data centers hosting high-density GPU/accelerated-compute infrastructure under long-term leases and hosting arrangements; this is the core growth segment. At Polaris Forge 1, CoreWeave leases total 400 MW of contracted capacity across ELN-02, ELN-03 and Building 4, and Applied Digital signed additional 15-year take-or-pay leases at Delta Forge 1 (300 MW) and Polaris Forge 3 (300 MW) with a new hyperscaler.
• Data Center Hosting (blockchain) Business — Legacy blockchain data center hosting, described in the 10-K as a smaller, single-customer component of the business that is expected to decline in relative significance over time.
• Cloud Services / ChronoScale (consolidated) — Applied Digital contributed 100% of Applied Digital Cloud Corporation to Ekso in exchange for 138,216,820 Ekso shares, and the combined company renamed itself ChronoScale, trading on Nasdaq under 'CHRN' from May 5, 2026. Applied Digital owns approximately 96% of ChronoScale as of fiscal year-end; ChronoScale is consolidated but excluded from Applied Digital's non-GAAP measures.

Recent performance

Fiscal year 2026 revenue was $611.3 million, up 167% from the prior year, while net loss attributable to common stockholders was $249.2 million, or $0.91 per diluted share. In the fiscal fourth quarter ended May 31, 2026, revenue was $258.7 million, up 407% year over year, with a net loss attributable to common stockholders of $110.6 million ($0.39 per basic and diluted share). Non-GAAP results for the quarter were adjusted revenue of $240.4 million, adjusted net income of $12.9 million ($0.04 per diluted share), adjusted EBITDA of $42.4 million and net operating income of $39.9 million. Full-year non-GAAP figures were adjusted revenue of $539.7 million, adjusted net income of $36.1 million ($0.11 per diluted share), adjusted EBITDA of $107.2 million and net operating income of $90.4 million. The company reported operating cash flow of $89.7 million for fiscal 2026 and, as of May 31, 2026, total assets of $9.93 billion, total liabilities of $6.19 billion, shareholder equity of $1.72 billion and cash and equivalents of $1.59 billion.

Strategy

Applied Digital is concentrating capital and operations on its HPC Hosting Business under a standardized 'AI factory' model, targeting roughly 150 MW campuses deliverable in about 14 to 18 months. It is expanding its campus pipeline, including 400 MW contracted with CoreWeave at Polaris Forge 1, and signed two 15-year take-or-pay leases of 300 MW each with a new high investment-grade hyperscaler at Delta Forge 1 (Boyce, Louisiana) and Polaris Forge 3, plus a subsequent 210 MW lease at Delta Forge 2. Funding has been raised through a $2.15 billion private offering of 6.750% Senior Secured Notes due 2031 at APLD ComputeCo 2 LLC, a $550 million revolving credit facility arranged by Goldman Sachs, and a $300 million senior secured bridge facility (since repaid with note proceeds). The company strengthened credit support on existing CoreWeave leases through a restructured SPV, springing guarantees from CoreWeave and a $50 million letter of credit. It separated its cloud services business into ChronoScale while retaining approximately 96% ownership, and it expects legacy blockchain hosting to continue declining in relative significance. Key stated constraints and differentiators are control of power-advantaged sites and securing interconnection ahead of demand.

Risks

• Customer concentration — The 10-K states the business has had and is expected to continue to have significant customer concentration, with HPC revenue heavily tied to leases with CoreWeave and the blockchain segment described as single-customer.
• Capital access and leverage — The 10-K flags that the company may be unable to access sufficient additional capital to grow and may be unable to refinance indebtedness at maturity or on terms as favorable as the original debt.
• Construction and lease commencement delays — The 10-K cites risk that the company may be unable to complete data center campuses on time or within anticipated cost estimates, and that delays in lease commencement could adversely affect financial condition and results.
• Internal control weakness history — The 10-K states that the company previously identified material weaknesses in internal control over financial reporting and, though remediated, may identify additional material weaknesses or otherwise fail to maintain effective internal controls.

Outlook

Management points to contracted, long-dated revenue from HPC leases: a 15-year take-or-pay lease for 300 MW at Delta Forge 1 with approximately $7.5 billion in base-term contracted revenue and a second 15-year take-or-pay lease for 300 MW at Polaris Forge 3, also approximately $7.5 billion, both with initial operations expected to commence in calendar year 2027. A third 15-year take-or-pay lease with the same hyperscaler for 210 MW at Delta Forge 2 was signed subsequent to the quarter. At Polaris Forge 1, the first approximately 100 MW data center became operational in October 2025, a second approximately 150 MW data center is partially operational, and a third approximately 150 MW data center is under construction with an anticipated ready-for-service date in calendar year 2027. Proceeds from the $2.15 billion 6.750% Senior Secured Notes due 2031 are earmarked to fund development of 200 MW of critical IT load at Polaris Forge 2 in Harwood, North Dakota.