Applied Digital: A House of Cards?

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Right, so Applied Digital. Everyone’s terribly excited, aren’t they? Sixteen billion in contracted leases. Sounds… substantial. Like a fortress. Except I’ve spent enough time looking at balance sheets to know that fortresses have foundations, and sometimes those foundations are built on sand. Or, in this case, a rather precarious stack of IOUs.

The bulls will tell you it’s locked-in cash flow, a sure thing. And honestly? That’s a lovely story. It’s just… I tend to prefer stories with a little grit, a little acknowledgement that things can go wrong. And oh, darling, can they go wrong here.

It’s not that the leases aren’t written well. It’s that paper doesn’t stop someone from walking away when they’re staring down a very real financial abyss. And that, my friends, is the counterparty risk. It’s polite financial speak for ‘we’re only getting paid if everyone else is solvent.’ Which, let’s be honest, is a big ask these days.

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And here’s the kicker. A huge chunk of that future revenue – $11 billion out of $16 billion – relies on CoreWeave. Which, let’s be honest, is also deeply in debt and currently losing money. It’s like one house of cards leaning on another. It’s… precarious.

CoreWeave’s debt has surged from $5.5 billion to $10.6 billion, and they’ve lost $766 million in the last year. This is the company that Applied Digital’s entire thesis hinges on. It’s a bit like trusting a toddler to operate a nuclear reactor.

And then, just when you thought it couldn’t get any more complicated, CoreWeave is heavily reliant on OpenAI – the ChatGPT people. OpenAI is burning through cash at an astonishing rate. They expect to lose two hundred and eleven billion dollars from 2026 to 2030. Uber lost a measly $18.2 billion during its early years. It’s… breathtaking.

So you end up with this Russian nesting doll of counterparty risk. Applied Digital depends on CoreWeave, which depends on OpenAI, which depends on investors continuing to throw money at AI before it actually generates any profit. It’s a bit like waiting for Godot.

If any of these layers crack – if OpenAI’s fundraising stalls, if CoreWeave can’t service its debt – the consequences will flow downhill directly to Applied Digital’s shareholders. It’s not a pretty picture.

The Bottom Line (and My Anxious Thoughts)

Applied Digital’s $16 billion pipeline is real, yes. But it’s not guaranteed in the way that investors seem to believe. Am I being too cautious? Too pessimistic? Possibly. I do have a tendency to overthink things.

But honestly, there are layers of risk here that make me deeply uncomfortable. And in my experience, when something feels this precarious, it usually is. I’m not saying it will collapse. I’m just saying… keep your seatbelts fastened. You might be in for a bumpy ride.

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2026-02-27 14:23