Applied Digital (APLD) Q4 2025: $7B CoreWeave Leases Anchor Multi-Gigawatt AI Data Center Ambitions
Applied Digital’s long-term CoreWeave lease agreements—totaling $7 billion—signal a strategic inflection, anchoring the company’s transition from cryptocurrency hosting to next-generation AI and high-performance compute (HPC) infrastructure. With a multi-gigawatt pipeline, streamlined build processes, and deepening hyperscaler relationships, APLD is positioned to scale rapidly as demand for AI infrastructure accelerates. The company’s focus on repeatable campus design, cost discipline, and geographic advantages in the Dakotas underpins its roadmap, though execution risk and financing remain key watchpoints as the business pivots to larger, more complex projects.
Summary
- AI Infrastructure Pivot: Long-term CoreWeave leases firmly shift APLD’s center of gravity to AI and HPC.
- Build Speed and Scale: Streamlined processes cut build times in half, supporting rapid campus deployment.
- Pipeline Visibility: Advanced negotiations with multiple hyperscalers signal robust demand and future growth optionality.
Performance Analysis
Applied Digital’s Q4 results reflect a business in transition, with revenue growth driven by expanded capacity in its legacy data center hosting (cryptocurrency) operations, but the strategic story is dominated by the $7 billion, 15-year CoreWeave lease agreements at the Polaris Forge One campus. The company’s top-line increased 41% year-over-year, propelled by additional megawatts online, while cost of revenue and SG&A climbed due to business scale, personnel expansion, and accelerated stock-based compensation. Adjusted EBITDA was modestly positive, but net losses remain, reflecting ongoing investment and ramp costs.
Capital structure is evolving rapidly, with $120.9 million in cash at quarter-end, plus $269 million raised post-quarter via ATM and preferred stock, offset by $688 million in debt. Project financing for Polaris Forge One is expected to close in four to ten weeks, with terms in line with industry standards for investment-grade tenants. Sequential revenue is set to rise in the August quarter as technical fit-out revenue for the first CoreWeave building is recognized, preceding the start of lease revenue in late 2025.
- Hosting Expansion: 286 megawatts of fully contracted crypto hosting capacity underpins legacy revenue, but future growth will be AI-driven.
- Cost Structure Pressure: SG&A surged $15 million, driven by headcount and non-cash compensation, highlighting the scaling pains of rapid expansion.
- Balance Sheet Maneuvering: Significant post-quarter capital raise and pending project financing are critical to support multi-campus buildout.
While short-term results reflect legacy business dynamics and investment ramp, the real value creation hinges on successful execution and monetization of the AI/HPC campus pipeline.
Executive Commentary
"During the quarter, we signed a transformative 15-year lease agreement with CoreWeave, the AI hyperscaler, to deliver 250 megawatts of critical IT load at our Ellendale, North Dakota campus, now named Polaris Forge One. These agreements are expected to generate approximately $7 billion in contracted revenue over the lease terms and to position Applied Digital as a leader in AI and HPC infrastructure."
Wes Cummins, Chairman and CEO
"Since the end of the quarter, we've raised approximately $270 million between our ATM and Series G preferred stock. Combined with the significant equity we already have in the campus, we believe this puts us in a very strong position as we seek to wrap up the new financing package."
Sadal Momand, Chief Financial Officer
Strategic Positioning
1. CoreWeave Anchor Leases Redefine the Business Model
The $7 billion, 15-year CoreWeave leases at Polaris Forge One fundamentally reposition APLD as a long-term AI and HPC infrastructure provider. The agreements de-risk a substantial portion of future revenue and establish the company as a credible partner for hyperscalers, moving beyond the volatile crypto hosting model.
2. Multi-Gigawatt Pipeline and Accelerated Build Times
Applied Digital’s proprietary building design and supplier consolidation have reduced projected build times from 24 to 12-14 months, enabling rapid scaling. The company is actively marketing a multi-gigawatt pipeline, with two additional hyperscalers onboarded and advanced negotiations underway for new campuses, both within and outside the Dakotas.
3. Geographic and Technical Moats
The “Dakota Advantage” combines abundant low-cost power, stranded energy, and natural cooling, supporting projected PUE (power usage effectiveness, a data center efficiency metric) of 1.18 and near zero water consumption. These factors create a cost and sustainability edge, with the company estimating a 100-megawatt customer could save $2.7 billion over 30 years versus industry peers.
4. Cloud Services Business Under Strategic Review
The board is reviewing strategic alternatives for the cloud services segment, signaling a likely exit or repositioning as the company doubles down on AI/HPC infrastructure and large-scale campus development.
5. Repeatable Full-Stack Model Preferred Over Powered Shell
Management is committed to owning and operating full-stack campuses, rather than pursuing lower-margin powered shell models, to retain operational control and maximize long-term value capture from hyperscaler demand.
Key Considerations
Applied Digital’s Q4 marks a decisive pivot from legacy crypto hosting to AI/HPC infrastructure, but the path forward is capital intensive and operationally complex. The company’s ability to execute on multi-year, multi-campus projects will determine whether the $7 billion anchor leases translate into sustainable value creation.
Key Considerations:
- Execution on Build Timelines: Streamlined processes are reducing build times, but any slippage on major projects could trigger penalties or erode credibility with hyperscaler tenants.
- Financing and Leverage: Multi-campus buildout requires substantial capital; successful project financing is essential to avoid over-leverage and ensure liquidity.
- Hyperscaler Relationship Depth: Onboarding with multiple investment-grade hyperscalers is a competitive moat, but conversion of pipeline to signed leases remains critical.
- Legacy Crypto Hosting Outlook: While still a material contributor, the crypto segment is increasingly peripheral to the long-term growth narrative.
- Geographic Expansion Strategy: North Dakota remains the primary focus, but regulatory and tax considerations (e.g., South Dakota sales tax) could shape future site selection.
Risks
Applied Digital faces material risks around project execution, capital intensity, and customer concentration. Delays in construction or financing could impact lease revenue timing and cash flow, while reliance on a small number of hyperscaler tenants heightens exposure to contract renegotiation or deferral. The capital markets environment and regulatory factors (e.g., state tax policy) could also influence expansion plans and cost structure.
Forward Outlook
For Q1 fiscal 2026, Applied Digital guided to:
- Significant sequential revenue increase from technical fit-out revenue at Polaris Forge One (customer-funded, small margin contribution)
- Lease revenue for the first building to begin after fit-out, with staged ramp into calendar Q4 2025 and beyond
For full-year 2026, management did not provide formal guidance but highlighted:
- Multi-year buildout of three major facilities at Polaris Forge One (100MW in Q4 2025, 150MW mid-2026, 150MW in 2027)
- Active negotiations for additional campuses, with groundbreakings expected before year-end
Management emphasized robust demand from hyperscalers, a streamlined contracting process, and the expectation that financing for current projects will close within 4 to 10 weeks, subject to typical industry timing and professional services bottlenecks.
Takeaways
Applied Digital’s Q4 marks a watershed moment as the company secures $7 billion in long-term AI infrastructure leases and accelerates its transition to a full-stack, multi-gigawatt data center operator.
- Strategic Anchor: The CoreWeave leases validate APLD’s design, speed, and location strategy, providing multi-year revenue visibility and industry credibility.
- Execution Watchpoint: Successful delivery of Polaris Forge One and conversion of pipeline deals are the next critical milestones for value realization.
- Future Focus: Investors should monitor project financing closure, additional hyperscaler lease signings, and continued progress on build timelines as leading indicators of scalability and capital discipline.
Conclusion
Applied Digital’s transformation into a leading AI and HPC infrastructure provider is now anchored by long-term, high-value leases and a scalable campus model. The next phase will test the company’s ability to deliver on its ambitious pipeline while balancing capital requirements and operational complexity—setting the stage for potential outsized growth, but also heightened execution risk.
Industry Read-Through
The rapid shift of Applied Digital’s business mix and the willingness of hyperscalers like CoreWeave to enter into multi-billion dollar, long-term leases underscore the acute demand for AI and HPC data center capacity in North America. The company’s emphasis on speed, efficiency, and geographic advantages in power and cooling is likely to set new benchmarks for data center development. Competitors in both legacy crypto hosting and traditional colocation will face mounting pressure to adapt business models, streamline build processes, and secure advantaged sites, as hyperscaler demand increasingly dictates industry economics and capital allocation.