Applied Digital (APLD) Stock Faces Debt Scrutiny Despite $36b AI Leases

Applied Digital entered this earnings day with a bruised stock, down about 23% over the past month, and the initial reaction stayed cautious as the shares slipped another 2.1% to close near US$27.40. That move underlines a simple message: the market is still wrestling with a high growth, high valuation story funded by heavy debt.

The headline this quarter is not the revenue line. It is the strain from building a US$4.2b cash and US$5.0b debt balance sheet around long term hyperscale data center leases. Investors now have to weigh that leverage against the long duration “AI factory” contracts that management is putting at the center of the Applied Digital thesis.

Is Applied Digital priced for the AI data center boom, or is it already assuming flawless execution on growth and leverage? Compare its rich 13.1x P/S multiple with our detailed valuation analysis for Applied Digital

FY 2026 Earnings Summary

• Revenue, Q4 FY 2026 vs. Q4 FY 2025: US$258.7 million vs. US$51.1 million (very large increase in reported revenue)
• Net Income, Q4 FY 2026 vs. Q4 FY 2025: loss of US$110.6 million vs. loss of US$53.9 million (loss widened)
• Basic EPS, Q4 FY 2026 vs. Q4 FY 2025: loss of US$0.39 per share vs. loss of US$0.24 per share (per share loss widened)
• Cash and Debt, Q4 FY 2026: cash of about US$4.2b and debt of about US$5.0b (highly leveraged balance sheet)

Prefer clean visuals instead of scrolling through dense tables of Applied Digital figures? View the full picture of its balance sheet strength and leverage profile at a glance in our company report for Applied Digital.

Applied Digital’s Bull Story Meets Concrete Lease Wins

The bullish pitch on Applied Digital is that long dated hyperscaler leases turn its “AI factory” buildout into visible, recurring cash flows. The latest quarter gives that argument real substance. Management now reports about US$36b of contracted long term lease revenue supported by roughly 1.41 GW of committed IT load across five campuses. Three of those campuses were signed in just the last four months, including roughly US$20b of new contracts with a single investment grade hyperscaler.

Revenue of US$258.7m in Q4, with US$208.2m tied to services for tenant fit out and US$50.6m from data center rental, shows the transition from construction activity into rent bearing AI capacity is underway. All reported construction phases have been delivered on time and on budget so far, which directly backs the claim of repeatable, rapid build cycles as a core part of the Applied Digital model.

Compare Applied Digital’s on-time, on-budget buildout and multi-decade lease commitments with the way institutional analysts are updating their models right now. See the consensus price target analysis for Applied Digital to check how those views line up with your own.

Evaluating Applied Digital’s High Leverage Bear Case

The core bearish worry on Applied Digital is simple. A highly leveraged balance sheet and heavy cash burn could outrun the AI data center ramp and force painful funding moves. The latest quarter does not close that file. Cash of about US$4.2b and debt of about US$5.0b confirm that the business is already running with large gross leverage, while the company still reports a quarterly net loss of US$110.6m, with basic EPS at a loss of US$0.39.

On the positive side, about US$36b of contracted lease revenue and adjusted EBITDA of US$42.4m show the debt stack is at least anchored to long dated, investment grade hyperscaler contracts. However, the share price is down about 23% over 30 days and 18% over 90 days, which suggests the market is not yet giving full credit for that contract cover against the funding and execution risks.

After a 23% share price decline over 30 days, a quarterly loss, a reported cash runway of under 12 months and a volatile stock, it is fair to ask if these are isolated issues or signs of deeper fragility. Review our independent risk analysis for Applied Digital which shows 2 important warning signs

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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.

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