Applied Digital: Seriously?

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So, everybody’s excited about data centers, right? Trillions of dollars, McKinsey says. Trillions! Like there’s just an endless supply of money floating around for server farms. And Applied Digital (APLD +25.12%) is supposed to be the golden goose. Everybody’s jumping on board. It’s… irritating. It just feels… wrong.

They’re pitching this as a sure thing. A “pure-play beneficiary,” they call it. Like that means anything. It’s a stock that’s gone up a lot. A lot. And that’s always the first sign of trouble. It’s like people are actively trying to be fleeced. I dug into the filings, and honestly, it’s just… a mess. A carefully constructed mess, but a mess nonetheless. Three things, three red flags, and I’m out.

Debt. Just… Debt.

Okay, so they went from $44 million in debt to $2.6 billion. In what, a year and a half? That’s not a trend, that’s a freefall. And the debt-to-equity ratio? North of 125%. It’s practically vertical. They say they can refinance, get better rates once the facilities are built. “Once.” That’s a big “once.” Like waiting for a bus that never comes. And it’s expensive debt, naturally. Everything good is expensive. Everything bad is… well, also expensive, but in a different way.

They’re losing money, too. $125 million in the last year. And they’re leveraged to the hilt. It’s just… irresponsible. It’s like borrowing money to buy lottery tickets and then being surprised when you don’t win.

One Customer. Seriously?

CoreWeave. That’s it. All their growth, all their revenue, basically everything hinges on one company. One. It’s like building a house on a foundation of… well, on a foundation of another company. It’s inherently unstable. And CoreWeave, let’s be honest, isn’t exactly flush with cash themselves. They’re operating at a loss. So we’ve got one company losing money relying on another company losing money. What could possibly go wrong?

And they have no leverage. None. If CoreWeave decides to build their own facilities, or renegotiate the terms, Applied Digital is completely at their mercy. It’s just… humiliating. It’s like going to a negotiation with your hands tied behind your back and then being surprised when you don’t get what you want.

Lease Revenue? A Mirage.

$16 billion in lease revenue over 15 years. That’s the story. That’s what everyone’s buying into. “Secure” lease revenue. Right. Except it’s not secure. Not even close. CoreWeave can walk away, penalty-free, if the construction isn’t completed on time. Penalty-free! What kind of deal is that? It’s like saying, “Here’s a million dollars, but you can just give it back whenever you feel like it.”

They had to agree to those terms to get the business. And that’s the part that really bothers me. The desperation. The willingness to compromise. It’s just… unbecoming. It’s like begging for a handout and then acting surprised when you’re treated like a beggar.

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The Upside? Maybe. The Risk? Immense.

Look, I get it. If they deliver on the construction, maintain the CoreWeave relationship, refinance the debt… there’s potential upside. But it’s a tightrope walk. A very precarious tightrope walk. And I just don’t have faith in their ability to stay balanced.

I’m not saying it’s definitely going to fail. I’m just saying it’s far too risky for my taste. I wouldn’t own this stock. It’s just… a headache waiting to happen. And I have enough headaches already, thank you very much.

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2026-02-06 21:02