APLD · Applied Digital
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $22.44
Note written ·
Price against the kill line
28.8% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $22.44, on record since 11 November 2026. The shares are down 48.8% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $22.44, the 50-day average of closes, which would show the shares recovering their three-month downtrend and leading the S&P 500. A financing for the remaining 800 MW priced at or below the 7.000% coupon on the 2031 notes would also point the same way.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 31 August 2026, filed 7 October 2026
- Revenue, latest quarter ($M)
- 342
- Revenue, change on a year (%)
- +322.4
- Gross margin (%)
- 28.1
- Operating margin (%)
- −18.2
- Net cash, cash less debt ($M)
- −3,427
All filed numbers
What Applied Digital reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 342 | +322.4 | 28.1 | −18.2 |
| first filed | 127 | — | 42.5 | −67.6 |
| first filed | 127 | — | 20.6 | −24.5 |
| first filed restated | 80.9 | — | 27.3 | −12.1 |
| Pre-tax income ($M) | −166 |
| Net income ($M) four quarters: −352 | −184 |
| Diluted shares, change on a year (%) against the quarter to 31 August 2025 | +13.9 |
| Operating cash flow ($M) | Not available |
| Capital spending ($M) | Not available |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 2,950 |
| Debt ($M) notes | 6,377 |
| Net cash, cash less debt ($M) | −3,427 |
| Deferred revenue ($M) +6178.0% on a year | 39.3 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 114 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,603 |
| Market value ($M) | 4,829 |
| Enterprise value, market value plus net debt ($M) | 8,256 |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 3.0 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 21.6% of shares outstanding sold short, 2.2 days of average trading to cover, +15.6% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $6.7M | $683K |
| 12 monthsfrom | $6.7M | $13.6M |
The thesis
Applied Digital's data-centre rent is growing, but the cost and timing of financing about 800 megawatts (MW) of unbuilt capacity now drive the shares, and the evidence favours lagging the S&P 500 over the next three months. The financing terms and the fiscal Q2 2027 rental revenue figure, due around 8 January 2027 (estimated), settle the case.
The shares closed at $17.91 on 11 November 2026, up from $16.68 the session before, after CoreWeave reported third-quarter revenue of $3.7 billion, up 168%, and raised its full-year outlook (Reuters, 11 November 2026). The close is still 64.7% below the 52-week high of $50.73 (intraday, 28 May 2026) and down 41.5% over three months. A one-day rebound across the neocloud group has not changed Applied Digital's own financing gap.
On 2 November 2026 chief executive Wes Cummins said about 800 MW still needs financing over 12 months and about 600 MW of the 1.4 gigawatt (GW) expansion plan is financed, according to 247WallSt. He said higher Treasury yields and wider credit spreads have raised borrowing costs.
Bullish and bearish views on Applied Digital Corporation
The bull case on Applied Digital Corporation (APLD), in brief: rent grew sequentially. The bear case: financing is unfinished.
Bull case
- Rent grew sequentially. Data-centre rental and other revenue was $79.1 million in fiscal Q1 2027 (quarter ended 31 August 2026), against $50.6 million in fiscal Q4 2026, per the company's 8-K of 7 October 2026. Base rent was $65.8 million of that total.
- Contracted revenue is large. The same release put total base-term contracted revenue at about $36 billion across five campuses, including about $5.2 billion from the 210 MW Delta Forge 2 lease. Cummins said on 2 November 2026 that tenants for the unfinanced capacity are rated AA or better (247WallSt).
- Insiders bought in October. SEC Form 4 filings show Cummins bought 55,803 shares at $18.04 and President Jason Zhang bought 300,000 shares at $18.86, both on 16 October 2026.
- Customer-side sentiment improved. CoreWeave shares rose more than 20% on 11 November 2026 after it raised guidance and said it would lean on customer prepayments and GPU-secured debt rather than unsecured bonds (Reuters, CNBC). CoreWeave is Applied Digital's largest tenant.
- Some analysts remain positive. B. Riley kept Buy and lowered its target to $51 on 30 October 2026. Roth Capital reinstated Buy with a $35 target on 21 October 2026.
Bear case
- Financing is unfinished. About 800 MW needs funding over 12 months, and Cummins acknowledged on 2 November 2026 that borrowing costs have risen (247WallSt). Fiscal Q1 2027 debt was $6.4 billion against $3.7 billion of cash, per the 8-K.
- Interest outruns rent. Fiscal Q1 2027 interest expense was $77.4 million against $65.8 million of base rent (247WallSt, 2 November 2026). Macquarie's preferred equity in the campuses carries a 12.75% rate.
- Estimates turned negative. Consensus fiscal 2028 earnings were a loss of $0.78 per share, against a $0.13 profit three months earlier (247WallSt, 2 November 2026).
- Analyst targets are falling. Morgan Stanley kept Equal-weight and lowered its target to $25 on 9 November 2026 (Benzinga), in a note that also cut targets on other powered-shell providers.
- Fit-out fees inflate revenue. HPC hosting revenue of $262.6 million in fiscal Q1 2027 included $183.5 million of tenant fit-out services. Net loss was $221.0 million, or $0.76 per share.
- Customer concentration is high. 247WallSt estimates CoreWeave at about 30% of contracted revenue, and the fiscal 2026 annual filing attributes 810 MW across three leases to one unnamed hyperscaler.
- Director sale and grants. Director Richard Nottenburg sold 31,250 shares at $21.84 on 13 October 2026, and five directors received 14,450-share awards each on 4 November 2026 (SEC Form 4 filings).
Price setup
The shares closed at $17.91 on 11 November 2026. The 52-week closing low is $14.17, set on 5 November 2026, and closes since then ran $15.55 (6 November 2026), $16.72 (9 November 2026), $16.68 (10 November 2026) and $17.91.
The close sits below both the 50-day average of closes and the 200-day average of $30.52. The 3-month reference close was $30.62 on 13 August 2026, so the shares have lost roughly two-fifths of that value in the window. The insiders' October purchase prices of $18.04 and $18.86 are both above the latest close.
The case turns on whether a rebound can carry the shares back through the 50-day average, the first level a recovery would need to clear. Until then the sequence of lower highs since the May peak stays intact.
Catalysts ahead
- ~8 January 2027 (est.): Fiscal Q2 2027 results; company date unconfirmed. Shows whether data-centre rental and other revenue holds above the $79.1 million reported for fiscal Q1 and how much of the 800 MW is financed.
What would change the view
A daily close above $22.44, the 50-day average of closes, which would show the shares recovering their three-month downtrend and leading the S&P 500. A financing for the remaining 800 MW priced at or below the 7.000% coupon on the 2031 notes would also point the same way.
What it trades with
Applied Digital trades with CoreWeave, Nebius and IREN. All four fell on 2 November 2026 in the 247WallSt report, and all rose on 11 November 2026 after CoreWeave's results (CNBC, Reuters). Credit-market conditions and hyperscaler capex commentary move the group more than company news does.
A 12 November 2026 headline reported voters rejected data-centre projects in 10 states, a new local-approval risk for the group's build-outs.
The evidence, claim by claim (8)
- Fiscal Q1 2027 data-centre rental and other revenue was $79.1 million, against $50.6 million in fiscal Q4 2026; total revenue was $341.9 million. Applied Digital fiscal Q1 2027 earnings release (8-K) · as of
- Total base-term contracted revenue is about $36 billion across five campuses, including about $5.2 billion from the 210 MW Delta Forge 2 lease. Applied Digital fiscal Q1 2027 earnings release (8-K) · as of
- Cash was $3.7 billion and debt $6.4 billion, including $1.59 billion of 7.000% senior secured notes due 2031. Applied Digital fiscal Q1 2027 earnings release (8-K) · as of
- CEO Wes Cummins said about 800 MW still needs financing over 12 months and about 600 MW of the 1.4 GW expansion plan is financed. 247WallSt report on CEO interview · as of
- Fiscal Q1 2027 interest expense was $77.4 million, above $65.8 million of base rent; consensus fiscal 2028 EPS was a loss of $0.78 against a $0.13 profit three months earlier. 247WallSt · as of
- CEO Wes Cummins bought 55,803 shares at $18.04 and President Jason Zhang bought 300,000 shares at $18.86 in open-market purchases on 16 October 2026. SEC Form 4 filings filed 19 October 2026 · as of
- Morgan Stanley kept Equal-weight on Applied Digital and lowered its price target to $25. Benzinga analyst headline · as of
- CoreWeave reported third-quarter revenue of $3.7 billion, up 168%, raised full-year guidance, and its shares rose more than 20%. Reuters via Investing.com; CNBC · as of
Sources
- CoreWeave stock soars as CEO reaffirms AI compute demand · cnbc.com ·
- CoreWeave sparks AI cloud stock rally, lifts Nvidia as results ease bubble fears · investing.com
- Applied Digital Slumps 8% as CEO Says 800 MW Still Needs Financing; Nebius and CoreWeave Fall 6% · 247wallst.com ·
- Morgan Stanley raises Riot target to $41, cuts Cipher, Hut 8, Galaxy and Applied Digital · blockspace.media
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