Can Applied Digital’s (APLD) AI Data Center Pivot Justify Mounting Losses and Debt Costs?

• In its fiscal third quarter ended February 28, 2026, Applied Digital reported revenue of US$126.64 million, while net loss widened to US$100.86 million and loss per share from continuing operations increased to US$0.36.
• Over the first nine months of fiscal 2026, revenue nearly doubled to US$352.56 million as the company shifted toward AI-focused data centers, even as it continued to report sizeable losses and absorbed rising interest costs tied to its debt-funded expansion.
• With revenue growth now heavily driven by AI data center demand and long-term leases, we’ll assess how this earnings update reshapes Applied Digital’s investment narrative.

Find 63 companies with promising cash flow potential yet trading below their fair value.

Applied Digital Investment Narrative Recap

To own Applied Digital today, you need to believe its pivot from crypto-linked hosting to AI-focused, long-term data center leases can eventually outweigh continued losses and a heavy debt load. The latest results reinforce that tension: revenue reached US$126.64 million in Q3, but net loss widened to US$100.86 million as interest expense and build-out costs rose. This news directly affects the key near term catalyst, which is executing its AI capacity roll-out on time while keeping financing risks contained.

One of the most relevant recent developments to this quarter is the ramp of Polaris Forge 1, where Applied Digital has signed multi-year, AI infrastructure leases that are now flowing into reported revenue. Q3 is the first period where lease income, rather than tenant contributions, is the dominant driver of growth. That shift helps explain why nine month revenue nearly doubled to US$352.56 million, even though profitability remains pressured by the company’s sizeable capital program and interest costs.

But investors also need to be aware that if construction delays or rising interest costs persist, the company’s ability to service its growing debt could become a much bigger concern...

Read the full narrative on Applied Digital (it's free!)

Applied Digital's narrative projects $755.7 million revenue and $102.2 million earnings by 2028.

Uncover how Applied Digital's forecasts yield a $45.27 fair value, a 63% upside to its current price.

Exploring Other Perspectives

Before this earnings release, the most cautious analysts were already warning that heavy debt and ongoing capital needs could cap upside, even while modeling revenue of about US$777.5 million and only US$19.9 million in earnings by 2028; this quarter’s mix of fast growth and deep losses may prompt both bullish and bearish investors like you to revisit how much balance sheet risk you are comfortable with.

Explore 24 other fair value estimates on Applied Digital - why the stock might be worth less than half the current price!

The Verdict Is Yours

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Applied Digital research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.
• Our free Applied Digital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Applied Digital's overall financial health at a glance.

Contemplating Other Strategies?

Our top stock finds are flying under the radar-for now. Get in early:

• Invest in the nuclear renaissance through our list of 93 elite nuclear energy infrastructure plays powering the global AI revolution.
• Explore 23 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research.
• Rare earth metals are the new gold rush. Find out which 28 stocks are leading the charge.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com