Then came its latest fiscal Q1 2027 earnings report, where revenue jumped 322% to $341.9 million, while adjusted EBITDA surged from $0.5 million to $64.4 million. Now those numbers are starting to put some operating weight behind the AI infrastructure story. Applied Digital now has approximately 1.41 GW of critical IT load under lease, representing roughly $36 billion of contracted revenue over the initial lease terms. 

The earnings also exposed the enormous capital burden sitting underneath that growth. That tension is what makes APLD worth looking at here.

The AI Buildout Is Now Showing Up in the Income Statement

The headline growth was huge, but the composition of the quarter is what makes it more useful.  HPC Hosting generated $262.6 million of revenue, including $65.8 million of base rent and $183.5 million from tenant fit-out services, producing $33.4 million of segment operating profit. 

Base-rental revenue is particularly important because it represents the recurring economics of the infrastructure once customers are actually occupying it. The business generated $58.8 million of NOI, giving the operating campuses an 89% NOI margin. 

The broader financial picture moved sharply as well. Adjusted revenue excluding ChronoScale reached $300.4 million versus $64.2 million a year earlier, while adjusted net loss narrowed to just $4.1 million from $7.6 million. 

For a company still building billions of dollars of infrastructure, going from essentially zero adjusted EBITDA to $64.4 million in one year is the number I care about most.

Building AI Factories Is Expensive as Hell

There is another side to those numbers, and the balance sheet makes it impossible to ignore. Applied Digital reported a $221 million net loss from continuing operations, compared with an $18.5 million loss a year earlier. Interest expense jumped 866% to $77.4 million, while SG&A climbed 289% to $114.7 million. 

The company also spent roughly $2.07 billion on property and equipment during the quarter, while generating just $63.9 million of operating cash flow. As of August 31, it held $3.7 billion in cash, cash equivalents, and restricted cash against $6.4 billion of debt. 

That is the tradeoff investors are making with Applied Digital. The company can produce extraordinary revenue growth when new AI capacity comes online, but getting that capacity online requires an extraordinary amount of capital first.

And management is still funding the pipeline aggressively. Applied Digital closed a $1.59 billion senior secured notes offering to fund construction of the 150 MW third HPC building at Polaris Forge 1 and repay a $300 million bridge facility. So the earnings don’t eliminate the financing risk. They show why the company keeps taking it.

1.41 GW Is Where the Earnings Story Gets Bigger

The reason investors can tolerate that capital intensity is the contracted backlog sitting behind it. The company has leases covering approximately 1.41 GW across five campuses, with roughly $36 billion of contracted revenue during the initial lease terms and approximately $86 billion if renewal options are exercised. 

And the physical buildout is advancing. Polaris Forge 1 reached 250 MW of live capacity after its second 75 MW phase became operational on October 1. Management expects Polaris Forge 2 to bring delivered critical IT load across its North Dakota campuses to 300 MW by year-end 2026. 

That progression is important because APLD is gradually moving from signing leases to collecting the economics attached to those leases. The first 100 MW building at Polaris Forge 1 became operational in October 2025. Building 2 added another 150 MW in two phases, while the third 150 MW building and several other campuses remain under construction. 

If APLD can keep converting that contracted capacity into operating campuses without blowing out construction costs or its financing requirements, the earnings base could look dramatically different over the next several years.

APLD Has Already Taken the Beating

The stock doesn’t look like it’s pricing that future in with much enthusiasm. Post-earnings, APLD closed at $23.81, with the 20-day SMA at $25.70, the 50-day at $27.09, and the 200-day at $32.13. The shares are down heavily from their roughly $50 peak in June, but they are now sitting near the rising support trendline that has developed from the April lows.

That creates a weird technical setup. The fundamentals are expanding while the stock remains below all three major moving averages. A reclaim of the $25.70 20-day SMA, followed by the $27.09 50-day, would begin repairing the tape. Above that, the 200-day around $32.13 becomes the larger technical hurdle. Lose the current $23-$24 support zone, however, and the market would be signaling that investors are still more concerned about APLD’s capital requirements than its contracted AI infrastructure.

Here’s Why APLD Is Still a Buy

This quarter showed that the AI buildout is no longer just a collection of leases and construction projects sitting on a presentation slide. Revenue is scaling, EBITDA is appearing, operating campuses are expanding, and 1.41 GW of contracted capacity gives the company a substantial runway. That makes Applied Digital a buy for me.

Unfortunately, the worries won, sending the stock down about 18% over the last three months. However, according to analysts at UBS, the pullback has created an opportunity. It’s why the firm just initiated a buy rating with a $120 price target on the stock. 

This debate is not unique to CoreWeave. Other AI-focused cloud companies, including Nebius Group (NASDAQ: NBIS), IREN (NASDAQ: IREN) and Applied Digital (NASDAQ: APLD), are also attracting investor attention as demand for specialized AI infrastructure expands. Their different business models give investors another way to assess the potential—and risks—of the neocloud market.

UBS analyst Karl Keirstead acknowledges the concern about CoreWeave’s debt. His view is that investors may be paying too much attention to the financing risk and too little attention to the demand for the company’s services. 

What Does CoreWeave Actually Do?

CoreWeave rents out the computing power companies need to develop and run AI. Its cloud platform gives customers access to specialized infrastructure built around powerful graphics processing units, or GPUs.

Think of it this way: An AI company may need substantial computing capacity, but building and operating its own data centers takes time, money, equipment and electricity. CoreWeave does that work and sells access to the resulting capacity.

The more companies train AI models or put AI tools to work, the greater the potential demand for computing services. UBS believes that demand extends beyond the best-known AI labs. Businesses across other industries could become a growing source of customers as they adopt AI.

That puts CoreWeave in the same broader investment conversation as other so-called neocloud providers. Nebius, IREN and Applied Digital are pursuing opportunities tied to the rapidly expanding need for AI computing capacity, although their infrastructure footprints, customer bases and financing strategies differ. For investors, the comparison highlights a central question across the group: how much revenue and cash flow can each company generate from the expensive infrastructure it is building?

Why Has the Stock Pulled Back?

Meeting that demand is expensive. CoreWeave needs to secure data centers, power and computing equipment before it can deliver capacity to customers. That means spending heavily today in hopes of collecting substantial revenue later.

Its latest financing plans brought the issue back into focus. On September 17, CoreWeave proposed a $3 billion convertible debt offering. The company subsequently priced an upsized $3.7 billion offering. Convertible debt is borrowing that may, under its terms, be converted into shares. It can help a company raise capital, but it also raises questions about future dilution for existing shareholders. 

Why UBS Is Still Bullish

Keirstead believes the market may be underestimating how durable AI computing demand could be. In the UBS comments provided, he also points to stronger GPU pricing, the prospect of generating more revenue from each gigawatt of capacity, and CoreWeave’s reputation for performance. UBS estimates that CoreWeave could eventually lift that figure from roughly $11 billion to more than $15 billion.

That is an analyst projection, not a result CoreWeave has already achieved. Still, it explains the bullish case: If the company can earn more from the infrastructure it builds, today’s spending may look more attractive over time.

UBS is essentially betting that demand and pricing will strengthen enough to outweigh investors’ current financing concerns. The $120 target reflects that outlook; it is not a guarantee that the stock will reach it.

CRWV Reclaims Its 50-Day Moving Average

CoreWeave stock is showing some signs of stabilization after its recent decline. As of September 23, CRWV was trading around $87.57, slightly above its 50-day simple moving average of $85.22. That puts the stock back above an important intermediate-term trend indicator, although it has not yet established a decisive move higher.

The chart also shows near-term resistance around $90 to $95, followed by a more significant hurdle around $100. On the downside, the 50-day moving average near $85 could provide initial support, while the recent August and September lows create additional support zones in the upper-$70s to low-$80s.

The MACD remains close to the zero line, suggesting that momentum has not yet developed a strong directional signal. For CRWV, a sustained move above recent resistance could strengthen the technical picture, while a break back below the 50-day average would put the recent stabilization into question.

What Investors Should Watch Next

The next few quarters should help clarify which side of the debate has the stronger case.

Start with customer demand. Is CoreWeave continuing to sign contracts at attractive prices? Then look at execution. Can it bring new capacity online when promised and turn those commitments into revenue?

Finally, watch the cost of growth. Additional borrowing, interest payments and share sales all affect what shareholders ultimately receive from the AI opportunity.

CoreWeave offers exposure to a fast-growing market, and UBS sees its recent decline as a chance to buy into that growth. The stock’s future, however, depends on more than enthusiasm for AI. CoreWeave has to show that building more capacity creates enough value to cover the substantial bill.

That means that the headline numbers in the company’s first-quarter earnings report for fiscal year 2026 were irrelevant. APLD stock is now about the future, and that future looks bright.

One of the key confirmations that investors received in the company’s earnings report is that the company is still on track to complete construction of its 100 MW building, Polaris Forge 1. This will ensure that the company can begin realizing some of that revenue from CoreWeave either in late 2025 or early 2026. 

APLD Stock Has Soared Well Above Analysts’ Estimates

At this point, CoreWeave is the company’s only announced customer for its compute-as-a-service business. But investors still have $15 billion reasons to be excited about that. That doesn’t change the fact that the stock is now trading nearly 50% higher than the consensus estimate of analysts. 

Analysts typically use an earnings report as an opportunity to update their ratings and/or price target for a stock. That may be the case with APLD stock. That will play out in the upcoming days. In the meantime, it’s time to decide what to do with the stock.

APLD Stock: Buy, Sell, or Hold

To wrap up this discussion, Applied Digital stock has a long-term bull case that is in the early stages. With $11 billion of contracted revenue over the next 15 years, it’s easy to see why APLD stock is up 207% in the last three months. 

If you’re a long-term investor who currently owns the stock, congratulations. The choice of whether to take some profits is one only you can make. But you’ll want to leave plenty of meat on the bone due to this stock’s long-term growth potential.

But what if you don’t currently own APLD stock? You have three options.

Option 1: Buy into Strength

First, you can buy into the momentum. There are many investors who believe that you buy into rallies like these, because they can frequently move much higher. But there’s a specific risk to that with Applied Digital that you need to consider.

About 30% of the stock’s float is held by short sellers. That’s undoubtedly part of what’s driving the stock price higher. Many of these investors are trying to cover their short positions as APLD stock is moving higher. That creates a short squeeze, which is one reason a stock can make a parabolic move.

The problem is you don’t know when this short squeeze may end and when it does, the reversal can be just as strong and just as swift. If you buy “at the top” you could be left underwater on the stock.

If you plan to hold APLD stock for several years, that may not matter. After all, you don’t have to justify your results every quarter like a major institution. However, it can still be uncomfortable to sit on a loss like that. 

Option 2: Buy the Dip with a Limit Order

That leads to your second option, you could wait for a pullback. The post-earnings move has pushed the stock’s relative strength indicator (RSI) into overbought territory. That’s a technical signal that the stock could be ready to come down. 

The concern is that about 65% of the stock is held by institutional investors. If a dip comes, it may be short-lived. A strategy you can use is to place a limit order at a specific price. For example, you could set the order to buy X number of shares at $25 a share. The order will only execute if the stock price hits $25 or lower. 

Option 3: Trade the Stock Using Options

This last option is only for those comfortable with options trading. But here are two strategies that you can use. I based these off of December 19, 2025 options chain. 

Sell an out-of-the-money call spread (for example, sell the $30 call and buy the $35 call expiring on December 19, 2025). This captures premium from current overbought conditions and limits upside risk. The $30 call trades around $5.25 and the $35 call around $3.95, offering a credit of roughly $1.30 per spread (maximum risk $3.70 per contract). This position profits if the stock stalls, pulls back, or rises modestly but stays below $30–$35 by mid-December.

Selling an out-of-the-money cash-secured put (such as the $25 strike, which offers $7.13 in premium) could be suitable for those willing to buy on a pullback, with a net entry below $18 if assigned.