For the first time, Applied Digital’s (NASDAQ: APLD) quarterly interest expense of $77.4 million has outpaced the $65.8 million the company collected in base rent, sharpening questions about its capital structure.
That financial detail landed alongside CEO Wes Cummins’ admission that roughly 800 megawatts of the company’s 1.4-gigawatt buildout plan still lacks committed financing, sending shares down 8% to $16.33 in afternoon trading.
The stock has now lost 51% of its value over the past year, and the latest slide pulled AI infrastructure peers down with it in a broad sector retreat.
Nebius Group (NASDAQ: NBIS) dropped 6% to $144.71, CoreWeave (NASDAQ: CRWV) fell 6% to $51.59, and IREN (NASDAQ: IREN) shed 6% to $22.62, all moving in lockstep with Applied Digital as investors reassessed how the AI data center expansion gets funded.
Cummins, speaking in a November 2 interview, was emphatic that his company does not belong in the same category as the cloud operators being targeted by broader market skepticism.
“We’re effectively a highly technical real estate business. Long-term leases, high-quality tenants,” he said, pushing back against the neocloud classification that has drawn scrutiny from investors and competitors alike.
That distinction matters because Applied Digital structures its revenue around long-term take-or-pay leases with hyperscalers rather than selling compute capacity directly, a model that looks more like commercial real estate than cloud billing.
Still, the financing burden is real: Macquarie’s preferred equity stake in Applied Digital’s campuses carries a 12.75% rate, and analyst consensus for fiscal 2028 has swung from a projected profit of $0.13 per share to an expected loss of $0.78 per share in just three months.
Concentration risk adds another layer of exposure, with CoreWeave representing an estimated 30% of Applied Digital’s contracted revenue, making that customer relationship a significant variable in the company’s financial outlook.
Cummins offered counterweights on the October 7 earnings call, telling analysts: “Today, we have approximately $36 billion in contracted revenue across five campuses, three states, and two very different geographic regions of the country.”
The CEO also noted that the 800 MW still awaiting project debt commitments is already leased to tenants carrying AA or better credit ratings, arguing the underlying demand is not in question.
Applied Digital’s operational momentum has been genuine: the company brought 250 MW online over the past 12 months and is targeting at least 600 MW of additional capacity in the year ahead, with a longer-term goal of 3.5 GW to 4 GW by 2030.
The broader financing environment, however, has grown less forgiving, with higher Treasury yields and wider credit spreads pushing up borrowing costs even as Cummins insists construction loans and the bond market remain accessible.
The competitive pressure is not purely financial: Tesla CEO Elon Musk warned last week that more than 200 neoclouds face “guppy-level death and consolidation,” reinforcing the market’s focus on which builders can actually secure capital at workable rates.
Wall Street’s average price target on APLD stood at $62 as of October 27, with individual targets spanning a wide range from $22 to $93, reflecting the degree of disagreement about whether the financing gap closes on favorable terms.
The company’s Q2 FY2027 earnings report, expected in January, will serve as the next concrete test of whether Applied Digital can lock in project debt for its remaining campuses at rates its lease income can sustainably support.
