A $36.2 billion portfolio of signed, non-cancellable leases did nothing to shield Applied Digital (NASDAQ: APLD) from a brutal morning session, as shares slid 10% despite zero company-specific news.
The selloff swept across the AI infrastructure sector, with Nebius (NASDAQ: NBIS) dropping 13%, CoreWeave (NASDAQ: CRWV) losing roughly 10%, IREN (NASDAQ: IREN) shedding 10%, and Cipher Digital (NASDAQ: CIFR) falling 9%.
The catalyst was Nebius, whose third-quarter revenue surged 571% to $980.8 million but included $325.1 million in non-recurring strategic partnership payments that raised quality-of-earnings questions.
Bank of America flagged that Nebius’s guidance implies a sequential revenue decline in the fourth quarter, with delays at third-party data centers pushing recognized revenue into early 2027.
A separate and arguably more alarming disclosure was a $40 billion capital spending plan for 2027, which rattled investors already sensitive to the pace of AI infrastructure buildout.
Nvidia’s leadership transition compounded the anxiety, as The Information reported that the chipmaker is expected to pull back on AI investments and credit guarantees following Jensen Huang’s exit as CEO on Thursday.
That report hit IREN particularly hard, given that Nvidia represents a $3.4 billion customer relationship for the company, while Cipher fell alongside news from the Wall Street Journal that private neocloud Nscale requires additional financing before its planned IPO.
None of these developments altered a single dollar of Applied Digital’s contracted revenue, where two anchor tenants account for 86% of the total signed lease value: a tier-one hyperscaler holding $20.2 billion and CoreWeave holding $11 billion across 15-year agreements.
CoreWeave’s own financial position draws scrutiny, with its bonds yielding above 17%, yet the leases carry no cancellation provisions and CoreWeave pays approximately 10% more per megawatt than hyperscaler peers.
Wall Street expects Applied Digital’s revenue to more than triple between fiscal 2026 and fiscal 2028, with minimum lease payments alone projected to reach $1.58 billion in fiscal 2028, representing around 80% of that year’s consensus estimate.
At today’s depressed price, Applied Digital trades at well under 5x forward sales, compared to a three-year average multiple of roughly 11x, a gap that suggests the market is pricing in risks beyond what the contracted backlog justifies.
The genuine vulnerability is not the tenants but the capital required to bring additional capacity online: CEO Wes Cummins stated this month that the company must still finance approximately 800 MW over the coming 12 months.
A sustained sector selloff raises the cost and complexity of that financing, meaning the fiscal second-quarter earnings report due in January becomes the sector’s next real stress test.
