TenQ

The Applied Digital story

Applied Digital builds AI data centers and hosts bitcoin mining, with the central question whether contracted campuses can generate rent fast enough to fund expansion.

Applied Digital stock reportTenQ Score 7/36 · every chart and check from its filings
  • $18.05share price, last close
  • $5.5Bmarket value
  • 7/36TenQ Score checks passed

The story in brief

  • Rent trails construction services. In the quarter to August 2026, HPC Hosting revenue included $183.5 million of tenant fit-out services and $65.8 million of base rent.
  • Contracted capacity becomes operational. Polaris Forge 1 reached 250 MW of live capacity on October 1, 2026, against 400 MW contracted under its CoreWeave leases.
  • Expansion consumes cash. Over the last twelve months, revenue grew 217.6% to $872 million, but free cash flow was -$4.5 billion.

What drives the business

  • Applied Digital has shifted from blockchain hosting toward purpose-built AI data centers leased under long-term agreements, anchored by CoreWeave's 400 MW commitment at Polaris Forge 1.
  • As of August 31, 2026, leases across five campuses represented approximately $36 billion of base-term contracted revenue, including the 210 MW, 15-year Delta Forge 2 agreement with an unnamed investment-grade hyperscaler representing approximately $5.2 billion.
  • The legacy Data Center Hosting Business generated $37.8 million of revenue and $13.3 million of segment operating profit in the quarter to August 2026, with its bitcoin mining facilities operating at full capacity.
  • Applied Digital owns approximately 96% of ChronoScale, which announced plans with Microsoft for a 50 MW AI compute deployment using NVIDIA GB300 NVL72 systems, and consolidates its results while excluding them from adjusted financial measures.
  • Access to power underpins campus development, including an agreement with Base Electron for capacity and energy from an approximately 1,200 MW natural gas-fired facility planned in North Dakota.

What the price assumes

At $23.85, the reverse DCF cannot measure an implied growth rate because free cash flow and operating earnings are negative, leaving the price dependent on future profits.

The shares trade at 8.3x sales despite an operating margin of -31.7%, alongside revenue growth of 217.6% over the last twelve months and an annual growth pace of 122.6% over the last three years.

TenQ's Value checks pass 0 of 6, with a sales multiple hurdle under 2.5x and a free cash flow yield hurdle above 3%, compared with Applied Digital's -61.8% yield.

What could change the story

  • Capital-intensive construction leaves Applied Digital dependent on additional financing, with $6.4 billion of debt, $2.9 billion of cash and short-term investments, and a failing TenQ self-funding check.
  • The company closed $1.59 billion of 7.000% Senior Secured Notes due 2031 for Polaris Forge 1 construction and repayment of a $300 million bridge facility, while interest expense reached $77.4 million in the quarter to August 2026.
  • Further funding could bring restrictive debt terms or dilution, following a 192.8% increase in shares over three years and $271 million of stock-based pay over the last twelve months.
  • Customer concentration remains material, with one customer accounting for 59% of HPC Hosting revenue, making a major customer's decline or departure consequential.
  • Construction delays can postpone rental income and, in some circumstances, permit lease termination, while concentration in North Dakota adds exposure to local regulation, market conditions and natural disasters.

What to watch next

  • Management expects initial operations at Polaris Forge 2 to bring delivered critical IT load across the North Dakota campuses to 300 MW by the end of calendar 2026.
  • The next releases will show whether base rent grows from $65.8 million in the quarter to August 2026 as delivered capacity expands, and whether that growth narrows losses and reduces the funding gap.
  • Finland's up to approximately 1 GW of potential power capacity remains a longer-term opportunity rather than delivered capacity, with management keeping near-term development focused on the U.S. portfolio and describing initial exposure as limited.

Sources

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