Applied Digital Corp.

Applied Digital Corporation is a U.S.-based designer, developer, owner, and operator of large-scale, purpose-built data centers engineered to support high-performance computing workloads, including artificial intelligence, machine learning, and other accelerated-compute applications. The industry is characterized by accelerating build-out of AI infrastructure, with hyperscaler capital expenditures on AI infrastructure estimated to exceed $700 billion annually by 2026, U.S. data center construction spending having tripled since 2022 and on track to surpass general office construction, and industry sources projecting that global demand for data center capacity could triple by 2030. The U.S. Department of Energy projects that the grid will require approximately 100 GW of new capacity by 2030, roughly half of it driven by data centers, and the Boston Consulting Group estimates a U.S. data center power shortfall that could exceed 45 GW by 2030. Rising rack power densities driven by successive generations of AI accelerators are pushing critical IT loads beyond levels most legacy facilities can support, increasing demand for purpose-built, high-density, liquid-cooled capacity.

The company competes with established data center owners and operators, including Digital Realty Trust, Inc. and Equinix, Inc., as well as hyperscalers that develop their own capacity, independent and private data center developers, and other power-advantaged developers, including companies that have expanded from blockchain hosting into HPC infrastructure, such as IREN Limited, Cipher Digital Inc., TeraWulf Inc., Hut 8 Corp., Riot Platforms, Inc., CleanSpark, Inc., HIVE Digital Technologies Ltd., Core Scientific, Inc., Bitdeer Technologies Group, Galaxy Digital Inc., Fermi Inc., Keel Infrastructure Corp, and MARA Holdings, Inc. Competitive strengths include control of power-advantaged sites, purpose-built high-density design, long-term contracted revenue with high-quality counterparties, and a standardized repeatable AI factory platform that delivers state-of-the-art data centers of approximately 150 MW in approximately 14 to 18 months with low water usage.

The company generates revenue through two reportable segments: the HPC data center hosting business and the blockchain data center hosting business. The HPC Hosting Business designs, constructs, owns, and operates next-generation data centers purpose-built to host high-density GPU and other accelerated-compute infrastructure under long-term lease and hosting arrangements with investment-grade hyperscalers and other leading compute customers. The Data Center Hosting Business provides energized infrastructure allowing the customer to deploy equipment based on its power requirements, currently serving a single crypto mining customer under a contract with a remaining term of approximately one and a half years. The cloud services business is no longer an operating or reportable segment following the May 2026 transaction that resulted in the company owning approximately 97% of the issued and outstanding equity of ChronoScale Corporation.

The HPC Hosting Business operates through several campuses. Polaris Forge 1, the flagship campus in Ellendale, North Dakota, has a first data center with approximately 100 MW of critical IT load that became operational in October 2025, a second data center expected to provide an additional 150 MW that is partially operational, and a third data center also expected to provide approximately 150 MW under construction with an anticipated ready-for-service date in calendar year 2027. Leases with CoreWeave at Polaris Forge 1 total 400 MW of contracted capacity. Polaris Forge 2 near Harwood, North Dakota, has an initial 200 MW data center with anticipated initial capacity in the second half of calendar year 2026 and full capacity in early calendar year 2027, with an approximately 15-year lease with a U.S.-based investment-grade hyperscaler for 200 MW. Delta Forge 1 is a 300 MW critical IT load campus in a strategic southern U.S. market with two approximately 15-year leases with a second U.S.-based investment-grade hyperscaler for an aggregate 300 MW. Polaris Forge 3 is a 300 MW critical IT load campus under construction across two buildings, with aggregate 300 MW contracted under two approximately 15-year leases with a high investment-grade hyperscaler representing approximately $7.5 billion ¹ of contracted revenue over the base term, with expected delivery beginning in the second half of calendar year 2027 through the second half of calendar year 2028. Delta Forge 2 is a 210 MW critical IT load campus comprising a single building under construction, with the full 210 MW contracted under an approximately 15-year lease with a high investment-grade hyperscaler representing approximately $5.2 billion ² of contracted revenue over the base term, with expected delivery in the first half of calendar year 2028. As of May 31, 2026, the company had executed long-term leases representing approximately 1,410 MW ³ of contracted critical IT load across five campuses, representing approximately $36.2 billion ⁴ of total contracted revenue over the initial 15-year base lease terms. Each lease is structured on a take-or-pay basis and is non-cancellable, such that a termination for convenience would require payment of the full remaining contractual value.

The Data Center Hosting Business operates hosting sites in Jamestown, North Dakota (a 106 MW facility) and Ellendale, North Dakota (a 180 MW facility), representing total hosting capacity of approximately 286 MW ⁵. This is a legacy line of business currently serving a single crypto mining customer under a contract with a remaining term of approximately one and a half years, and the company expects this segment to represent a declining share of its business as it scales HPC operations.

Significant operational developments during the period include the May 5, 2026 separation of the cloud business in a series of transactions resulting in the company owning approximately 97% ⁶ of the issued and outstanding equity of ChronoScale Corporation, whose common stock began trading on the Nasdaq Capital Market under the symbol CHRN on May 5, 2026. On August 18, 2025, the company broke ground on Polaris Forge 2. On October 22, 2025, the company entered into an approximately 15-year lease with a U.S.-based investment-grade hyperscaler for 200 MW at Polaris Forge 2. On January 22, 2026, the company broke ground on Delta Forge 1. On April 23, 2026, the company entered into two approximately 15-year leases with a second U.S.-based investment-grade hyperscaler for an aggregate 300 MW at Delta Forge 1. On August 28, 2025, a subsidiary entered into a third lease with CoreWeave for an additional 150 MW, bringing total contracted capacity at Polaris Forge 1 under CoreWeave leases to 400 MW. Through a partnership with Base Electron Corporation, the company is pursuing the development of approximately 1.2 GW ⁷ of front-of-the-meter, natural gas-fired generation in the Dakotas.

The company's overall financial trajectory reflects a transition from blockchain hosting to HPC infrastructure. The HPC Hosting Business is scaling with contracted capacity of approximately 1,410 MW ⁸ representing approximately $36.2 billion ⁹ in total contracted revenue, while the Data Center Hosting Business represents a declining share. As of May 31, 2026, approximately 100 MW ¹⁰ of HPC capacity was operating and revenue-generating. The company employed approximately 256 ¹¹ full-time employees as of May 31, 2026.

A primary growth vector is the expansion of HPC hosting capacity for AI workloads through build-outs at existing and future locations. The company has a contracted lease portfolio of approximately 1,410 MW ¹² across five campuses representing approximately $36.2 billion ¹³ in total contracted revenue over initial 15-year base lease terms, with expected delivery periods ranging from the second half of calendar year 2025 through the second half of calendar year 2028. Beyond the contracted portfolio, the company is developing an active pipeline of over 3 GW ¹⁴ of utility gross power consisting of near-term greenfield sites and expansion capacity at existing campuses, certain of which are scalable to 1 GW or more, and an extended pipeline of more than 5 GW ¹⁵ of utility gross power in earlier stages. Through the partnership with Base Electron Corporation, the company is pursuing approximately 1.2 GW ¹⁶ of front-of-the-meter natural gas-fired generation in the Dakotas to unlock additional power capacity.

A second growth vector is the standardized repeatable AI factory platform, which the company believes positions it to capture growing demand for HPC and AI infrastructure. The company develops campuses using a standardized franchise-style design engineered to deliver state-of-the-art data centers of approximately 150 MW in approximately 14 to 18 months with low water usage. The company has established long-term contracts with key suppliers including ABB for electrical equipment, BASX for mechanical and cooling systems, and Caterpillar for backup generation, enabling bulk orders against a multi-gigawatt development pipeline. The company is targeting states with favorable laws and regulations for AI workloads and HPC application industries to minimize risks associated with scaling operations.

The company has implemented proactive measures to address global supply logistics, including procuring and holding required materials in sufficient quantities and sufficiently in advance to support hardware deployment at scale and on accelerated construction timelines. The company has established long-term contracts with key suppliers to provide greater certainty regarding availability and pricing of essential components. The standardized AI factory design enables consolidated purchasing around a common set of trusted partners and supports repeatable build cycles of approximately 12 to 18 months per 100 to 150 MW facility.

The company faces material risks related to its dependence on principal customers, including its ability to execute leases with key customers, as the HPC Hosting Business relies on long-term leases with CoreWeave and a limited number of investment-grade hyperscalers. The company's ability to complete construction of data center campuses is subject to significant risks including delays or denials of entitlements or permits, power or other supply disruptions, and equipment failures. The availability of financing to continue to grow the business is a critical risk, as the company's expansion plans require substantial capital. The company is subject to risks from global supply logistics that have caused delays across distribution channels, with delivery schedules for specialized equipment such as power and cooling systems affected by constraints on globalized supply chains and potentially further impacted by tariffs. The company relies on a limited number of vendors for certain products and services, and some contracts provide a single source of materials, such that if any key supplier cannot perform, it could significantly delay data center development and operations.

Management's message emphasizes the company's evolution from a company focused on blockchain hosting into a purpose-built HPC data center platform organized around its proprietary AI factory model. The strategic priorities emphasized for the period ahead include continued expansion of HPC hosting for AI workloads through build-outs at existing and future locations, securing scalable power sites through a repeatable power strategy, and integrating power assets. Management believes that securing power and interconnection ahead of demand is the principal constraint on new HPC capacity and a core differentiator. The company's growth, capital allocation, and operating focus are centered on developing and operating HPC data centers, while legacy blockchain hosting operations represent a smaller single-customer component expected to continue to decline in relative significance over time.