Applied Digital Reports Fiscal First Quarter 2026 Results

Applied Digital reported fiscal Q1 2026 revenues of $64.2 million, an 84% year-over-year increase, but recorded a net loss of $27.8 million and adjusted EBITDA of $0.5 million, down from $6.3 million. Operationally, the company fully leased its Polaris Forge 1 campus to CoreWeave for an additional 150 MW, securing $11 billion in contracted revenue, and commenced construction on its second AI factory, Polaris Forge 2, backed by $112.5 million from Macquarie's $5 billion facility and an additional $200 million in preferred stock. These strategic expansions, alongside ongoing discussions for further hyperscaler commitments, underscore Applied Digital's aggressive push to become a leading AI infrastructure provider, targeting a $1 billion annualized NOI within five years.

Analysis

Applied Digital reported fiscal Q1 2026 revenues of $64.2 million, an 84% year-over-year increase, primarily driven by $26.3 million from HPC tenant fit-out services. Despite this strong top-line growth, the company posted a net loss of $27.8 million and a significantly reduced Adjusted EBITDA of $0.5 million, down from $6.3 million in the prior year, reflecting increased operating costs including a 165% rise in SG&A. This indicates a focus on growth and infrastructure build-out over immediate profitability.

Operationally, APLD fully leased its Polaris Forge 1 campus with an additional 150 MW agreement with CoreWeave, securing approximately $11 billion in total contracted lease revenue over 15 years. The company also broke ground on Polaris Forge 2, a 300 MW AI Factory, and is in advanced discussions with an investment-grade hyperscaler for 200 MW, with potential expansion to 1 GW. These developments are supported by recent financings, including an initial $112.5 million draw from a $5 billion Macquarie facility and $200 million from Series G Preferred Stock.

Management projects a $500 million annualized NOI run rate for Polaris Forge 1 once fully operational and targets $1 billion NOI within five years with Polaris Forge 2, positioning APLD as a leading AI infrastructure provider. The HPC hosting segment is ramping up, with the first 100 MW facility at Polaris Forge 1 expected operational in Q4 2025, while the Data Center Hosting business saw 9% revenue growth.

The substantial increase in net loss and SG&A, partly due to stock-based compensation, warrants close monitoring of profitability alongside aggressive expansion. The company's strategic shift towards AI infrastructure, backed by significant long-term contracts and diversified funding, underscores its ambition to capitalize on the growing demand for high-performance computing.

Key Decisions for Investors

• Monitor APLD's ability to translate significant contracted revenue into sustained profitability, given the current net losses and reduced Adjusted EBITDA despite robust revenue growth.
• Evaluate the progress of Polaris Forge 2 development and the execution of the anticipated hyperscaler lease, as these are critical for achieving the $1 billion NOI target and validating the company's long-term growth strategy.
• Assess the impact of recent financing activities on the balance sheet and future capital structure, particularly the utilization of the Macquarie facility and preferred stock, to ensure sustainable funding for aggressive expansion.