Applied Digital startled the market with a blowout quarter and a string of commercial wins that underline how hyperscalers are reshaping the data‑center landscape.
The Dallas‑based operator reported fiscal Q2 revenue of $126.6 million — up roughly 250% year‑over‑year — and posted an adjusted EBITDA of $20.2 million. While the company remains in the red on a GAAP basis, the loss attributable to continuing operations narrowed sharply to $31.2 million, a marked improvement from the prior year. Investors rewarded the news: shares jumped in premarket trading as analysts and traders parsed the details.
What moved the needle
Two developments stood out. First, Applied Digital reached Ready‑for‑Service at Polaris Forge 1 and energized ELN‑02, delivering 100 MW on schedule. That milestone unlocked fit‑out payments and partial lease revenue — the company recognized about $12 million in rental revenue this quarter and recorded roughly $73 million tied to tenant fit‑out work for CoreWeave.
Second, Applied Digital disclosed two major hyperscaler commitments that together lift its prospective lease pipeline to roughly $16 billion. CoreWeave has 400 MW under contract at Polaris Forge 1 (a multi‑building buildout), and a U.S. investment‑grade hyperscaler signed an approximately 15‑year lease for 200 MW at Polaris Forge 2 — a deal the company says could produce about $5 billion in revenue over the term. Management also said it’s in advanced discussions with another investment‑grade hyperscaler across multiple regions, and referenced additional near‑term opportunities totaling hundreds of megawatts.
Those signed and prospective leases turn what had been a growth story into something closer to an industrial rollout: large, long‑duration cash flows tied to multi‑year buildouts.
How they’re funding it
Applied Digital didn’t just announce revenue — it showed how it plans to fund growth. The firm completed a $2.35 billion private offering of senior secured notes due 2030 and has drawn repeatedly on a preferred‑equity facility with Macquarie Asset Management (total draws to date include a $562.5 million tranche this quarter and subsequent $337.5 million). Management emphasizes that these financing structures allow the company to retain most common equity in each site while limiting direct corporate capital commitments.
Balance‑sheet snapshots show the company ended the period with roughly $2.3 billion in cash and cash equivalents and $2.6 billion in long‑term debt on the balance sheet — figures that reflect both aggressive construction activity and fresh capital raises.
Technology and grid strategy
Applied Digital is pitching itself as more than just landlord: it’s investing in the power and thermal stack needed to host ultra‑dense AI clusters. The company led a $25 million funding round in Corintis, a direct‑to‑chip liquid‑cooling developer, and has strategic stakes in Babcock & Wilcox for power and thermal infrastructure. Those moves are deliberate — managing power draws and local grid impacts is central to winning hyperscaler business.
That demand for specialized infrastructure isn’t happening in a vacuum. Big tech’s appetite for compute shows up in product pivots and platform features that demand more on‑prem and edge capacity — from Google’s push into agentic, always‑available features to moonshot ideas about alternative locations for compute. For broader context on how companies are rethinking where and how AI gets hosted, see Google’s AI product moves and its research into unconventional sites like orbital data centers in Google’s AI Mode developments and Project Suncatcher.
What management is saying
CEO Wes Cummins framed the Dakotas strategy as a first‑mover advantage: cool climate, abundant power and access to long‑term renewable and dispatchable resources. CFO Saidal Mohmand highlighted liquidity strength and the repeatable financing playbook that, in management’s view, reduces funding risk while preserving upside for shareholders.
Applied Digital also revealed plans to spin out its cloud compute arm — Applied Digital Cloud — and combine it with EKSO Bionics to create ChronoScale, an accelerated compute platform focused on GPU‑optimized AI infrastructure. Applied Digital expects to retain a majority stake following the transaction, a move management says will let the cloud business scale independently.
Market reaction and the investor case
Analysts reacted positively: Needham reiterated a buy rating and identified the quarter as validation of execution. Retail and institutional traders have been active in the name after a huge 2025 rally; the stock’s valuation has stretched (Motley Fool noted a price‑to‑sales multiple in the 30x range at recent levels), but bullish investors point to long‑term contracted revenue streams and a massive pipeline as justification.
Risks remain. Execution on large, complex builds is never trivial: timing, utility interconnections, construction costs and reliance on major customers are all potential choke points. Management’s forward statements contain the usual caveats about needing to secure final documentation and close financings on anticipated terms.
Why it matters now
Applied Digital’s quarter is a snapshot of a broader trend: hyperscalers are placing big, multi‑year bets on bespoke campuses that combine power, cooling and long leases. If those contracts convert into sustained cash flow, companies like Applied Digital move from speculative buildouts to predictable infrastructure operators — a transition with big implications for valuation, financing and local economies where these campuses sit.
For now, the story is still being written: new buildings are coming online, financing is in place, and prospective deals loom. That combination — execution plus an expanding commercial backlog — is why traders and analysts are paying close attention.
(Disclosure: this article synthesizes public company filings and reporting from multiple outlets.)