Applied Digital Secures $11 Billion in AI Data Center Contracts—Revenue Jumps 84% as Strategic Expansion Accelerates
AI Lease Deals and Construction Progress Position Company for Rapid Scaling
Applied Digital (NASDAQ: APLD) has made a decisive leap toward becoming an AI infrastructure leader. In its fiscal first quarter 2026 results, the company announced $11 billion in anticipated lease revenue at its flagship Polaris Forge 1 campus, following the execution of a third long-term lease with hyperscale partner CoreWeave. Simultaneously, Applied Digital reported a striking 84% jump in total revenue, underscoring the surging demand for advanced, energy-efficient data center solutions in the age of AI and cloud computing.
Revenue Surges While Strategic Investments Weigh on Near-Term Profitability
The first quarter financials revealed substantial top-line momentum but also ongoing investment-driven losses, a pattern common among companies scaling rapidly in emerging markets. Revenue climbed to $64.2 million (up from $34.85 million in the prior-year period), boosted largely by $26.3 million in tenant fit-out service revenue within the high-performance compute (HPC) hosting business. However, operating and net losses increased as the company doubled down on expansion and personnel, posting a GAAP net loss to common shareholders of $27.82 million. Adjusted EBITDA, a key measure of core profitability, landed at $0.54 million.
| Key Metric | Q1 2026 | Q1 2025 | Year-over-Year Change |
|---|---|---|---|
| Revenue | $64.2M | $34.8M | +84% |
| GAAP Net Loss (to common shareholders) | $(27.82)M | $15.87M | N/A |
| Adjusted Net Loss | $(7.57)M | $(0.80)M | More Loss |
| Adjusted EBITDA | $0.54M | $6.26M | -91% |
| Cash, Cash Equivalents, and Restricted Cash (as of Q1 end) | $114.1M | $86.55M | +32% |
| Total Debt | $687.3M | N/A | N/A |
Long-Term Lease Revenues Secure $11 Billion—Expansion Momentum at Polaris Forge 1 and 2
The $11 billion anticipated lease revenue comes from the successful completion of all three planned leases at Polaris Forge 1, securing the campus’ entire 400 MW IT load with CoreWeave. Construction is nearing completion for the first 100 MW building (due online in late 2025), and another 150 MW building has begun, illustrating swift progress. These long-duration leases—spanning approximately 15 years each—give Applied Digital extraordinary forward visibility, a rare asset in the highly competitive AI infrastructure race.
Meanwhile, the company broke ground on Polaris Forge 2 (targeting a 300 MW campus in North Dakota), backed by new funding: $112.5 million drawn from a $5 billion facility with Macquarie Asset Management and $50 million for equipment financing, plus $200 million raised via preferred stock. Applied Digital now projects that once both campuses are fully operational, it could reach $1 billion in annual net operating income within five years—potentially transforming into a top AI-focused data center REIT.
AI and HPC Hosting Business Accelerates—Customer Efficiency Promises Billions in Savings
The high-performance compute (HPC) business contributed roughly $26 million in Q1 revenue, mainly from one-time fit-out payments, but long-term lease revenues are expected to ramp later in 2025 as buildouts are completed. All facilities employ waterless, liquid-cooling technology—minimizing environmental impact and promising significant energy and operational cost savings for customers. Management estimates a 100 MW tenant could save up to $2.7 billion over 30 years compared to traditional data center models.
Balance Sheet and Cash Flow: Funded for Growth, Yet Capital Intensity Remains High
Applied Digital reported a robust cash position at quarter end ($114.1 million) and closed subsequent financings totaling $362.5 million. While total liabilities (including significant debt for campus buildout) remain substantial, these new financings enable the company to push forward on aggressive timelines. For Q1, cash used in operating activities totaled $82 million, reflecting the heavy investment phase. Despite near-term negative free cash flow, the multi-year lease deals are expected to drive future cash generation.
| Balance Sheet (as of 8/31/2025) | Value |
|---|---|
| Total Assets | $2.40B |
| Total Liabilities | $1.29B |
| Stockholders’ Equity | $1.04B |
| Cash, Cash Equivalents & Restricted Cash | $114.1M |
| Total Debt | $687.3M |
What’s Next? Scaling Up for AI Infrastructure’s "Picks and Shovels" Era
Applied Digital is strategically positioning itself as a foundational enabler for the coming wave of AI infrastructure buildout. With hyperscalers investing $350 billion globally in AI deployment this year alone, management believes the firm is "in a prime position to serve as the modern-day picks and shovels of the intelligence era." Continued customer wins, construction milestones, and capital raises are likely to define the next year.
Key risks remain, including dependence on a small number of large customers, ongoing cash burn during scale-up, and the capital intensity of hyperscale projects. However, multi-year revenue visibility, industry-leading cooling technology, and a track record of executing massive projects at speed make Applied Digital a compelling case to watch for those interested in the evolution of digital infrastructure.
Takeaway: Bold Expansion, Contracted Revenues, and Leadership Ambition Signal an Inflection Point
Investors and industry observers should monitor Applied Digital’s progress toward bringing the full capacity of its new campuses online and its success in signing additional long-term customers at Polaris Forge 2. As the company targets $1 billion in net operating income within five years, it could quickly transform from a niche player to a cornerstone of global AI infrastructure.
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