David Moadel
5 min read
Quick Read
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Applied Digital and IREN each surged 9% as CEO Wes Cummins defended his 1.4-gigawatt plan, with 800 megawatts still needing financing.
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Elon Musk’s warning of neocloud consolidation deepened the selloff, and CoreWeave accounts for an estimated 30% of Applied Digital’s contracted revenue.
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Applied Digital’s quarterly interest expense of $77 million already exceeds its $65 million base rent collected, with $6.4 billion in total debt outstanding.
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AI data center stocks are clawing back ground after a financing scare shook the group, and one data center developer is leading the rebound. Applied Digital (NASDAQ:APLD) stock is at $17.65 in afternoon trading, up 9% from the prior close of $16.22. The gain recoups ground Applied Digital gave up on November 2, when CEO Wes Cummins discussed how much capacity the company still needs to fund.
Over the past month, Applied Digital stock is down 30%, so the bounce starts from a deep hole. A key Applied Digital tenant, CoreWeave (NASDAQ:CRWV), is higher as well, and two closely watched neocloud peers are posting strong gains too. Broad risk appetite is lifting AI infrastructure stocks with the midterm elections in focus, which helps Applied Digital and the rest of the group.
What Sent Applied Digital Lower on November 2
CEO Wes Cummins said on November 2 that Applied Digital must finance about 800 megawatts of data center capacity over the next 12 months, even as borrowing costs rise. So far, according to Wes Cummins, the company has financed about 600 megawatts of its 1.4-gigawatt plan.
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Those remarks landed recently. They came after Tesla (NASDAQ:TSLA) CEO Elon Musk warned that many neoclouds face “guppy-level death and consolidation.” Taken together, the comments fed a financing scare that hit Applied Digital and other AI data center names, which have leaned on heavy debt raises and stock sales to fund construction.
