> ## Content Index > Fetch the complete content index at: https://www.sotkn.com/llms.txt > Use this file to discover other available public pages before exploring further. # What Does Applied Digital Do? The Build-and-Lease AI Campus Model - URL: https://www.sotkn.com/stack/ai-data-centers/what-does-applied-digital-do/ - Published: 2026-10-11T01:49:45.000Z - Updated: 2026-10-11T01:49:45.000Z - Description: Applied Digital designs, builds and runs AI data-centre campuses and leases them to large tenants. It has 1.41 GW leased and about $36bn of contracted base-term rent, but 250 MW of AI hall live as of 1 Oct 2026. It gets paid base rent once each hall is handed over. - Author: Sean - Tags: #layer-ai-data-centers Applied Digital designs, builds and runs AI data-centre campuses and leases them to large tenants. At 31 August 2026 it had 1.41 GW leased across five campuses and about $36 billion of contracted rent over the base terms. As of 1 October, 250 MW of that AI hall was live. It gets paid rent only once a hall is handed over. `AI DATA CENTERS` · `Data as at 7 Oct 2026` · `Next update: after the next campus Ready-for-Service print` **Affects:** AI Data Centers · Neoclouds · Hyperscalers · US Applied Digital is the build-first end of the [AI Data Centers layer](https://www.sotkn.com/stack/ai-data-centers/): it turns land and power into halls that others fill with chips. Start with [What Is an AI Data Center?](https://www.sotkn.com/explained/what-is-an-ai-data-center/). Its first tenant, [CoreWeave](https://www.sotkn.com/stack/neoclouds/what-does-coreweave-do/), is a neocloud. The two big listed landlords, [Equinix](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/) and [Digital Realty](https://www.sotkn.com/stack/ai-data-centers/what-does-digital-realty-do/), rent finished space instead of building for a few tenants. **In short:** Applied Digital builds powered AI halls, hands them to a tenant, and collects base rent plus fees for fitting them out. At 31 August 2026 it had 1.41 GW leased and about $36bn of contracted base-term revenue. Only 250 MW of that was live as of 1 October. The model works if the build clock keeps pace with the lease book. It stumbles if the debt for halls under construction outruns the rent from halls that are finished. *Education only, not advice to buy or sell any security. Figures are from Applied Digital's fiscal Q1 2027 release (quarter to 31 August 2026) and its 2 October 2026 release, dated as shown.* ## Numbers that matter Leased vs live 1.41 GW → 250 MW About 18% live, our arithmetic (250 ÷ 1,410) · 7 Oct 2026 **Stuck** Contracted revenue, base terms $36bn About $86bn if every renewal option is used · 31 Aug 2026 **Booked** Quarter revenue $341.9m +322% on a year ago; $262.6m from AI hosting · quarter to 31 Aug 2026 **Paid** Rent vs fit-out in AI hosting $65.8m vs $183.5m Base rent against tenant fit-out services · quarter to 31 Aug 2026 **Watch mix** Debt and cash $6.38bn vs $2.95bn Debt (long-term plus current) against cash and equivalents · 31 Aug 2026 **Funded** Delta Forge 2 lease 210 MW 15-year lease, about $5.2bn over the base term · signed 8 Jun 2026 **Named** Status chips are Second Order's read. Applied Digital describes its tenants by type, not by name, except CoreWeave. We do the same. ## What does Applied Digital actually do? Three steps, in order. **Power. Build. Lease.** 1. **It secures power and land.** The company says power is the gating factor and that North Dakota has low-cost power and room. Since the quarter ended it has also taken a first step abroad with an agreement for up to about 1 GW of potential power capacity in Finland, and signed a power purchase agreement with Base Electron for a planned 1,200 MW gas plant in North Dakota. Applied Digital holds about 10% of Base Electron. 2. **It builds the hall.** Campuses are built as buildings of 100–150 MW, handed over in phases. Polaris Forge 1 in Ellendale, North Dakota reached 250 MW live across two buildings when the second 75 MW phase of Building 2 was handed over on 1 October 2026\. The campus is contracted for 400 MW at full buildout. 3. **It leases and operates it.** Polaris Forge 1 is leased to CoreWeave. Polaris Forge 2 is leased to an investment-grade hyperscaler. Delta Forge 1, Polaris Forge 3 and Delta Forge 2 are leased to a tier-one investment-grade hyperscaler. Applied Digital runs the halls and collects the rent. | Step | What it means | Where the risk sits | | ----- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | | Power | Land plus a firm route to electricity, sometimes with its own supply deals | Power plants and grid links that are still to be built | | Build | Halls built in phases of 75–150 MW and handed to the tenant as Ready for Service | Pace from groundbreaking to live megawatts, and the debt used on the way | | Lease | Long leases to large tenants; base rent starts at handover | Few tenants; one hall late delays that rent | It also runs an older business: two crypto-mining hosting sites, 106 MW in Jamestown and 180 MW in Ellendale, both at full capacity, which brought in $37.8m of revenue in the quarter. And it owns about 96% of ChronoScale, a public company that holds its historic cloud services business. Applied Digital leaves ChronoScale out of its adjusted figures. We use the unadjusted revenue where we can and say so. For the build clock in more detail, see our Wire on [75 MW coming online for CoreWeave](https://www.sotkn.com/wire/applied-digital-75-mw-online-coreweave-polaris-wire/) and our Analysis on [what the price assumes about the build clock](https://www.sotkn.com/analysis/applied-digital-build-clock-stuck-step-what-price-assumes/). --- ## How does Applied Digital make money? It gets paid base rent once a hall is live, fees for fitting the hall out for the tenant, and recoveries of some running costs. In the quarter to 31 August 2026 its AI hosting business made $262.6m of revenue: - **Base rent** — $65.8m. This is the recurring part and it starts at handover. - **Tenant fit-out services** — $183.5m. Work done for the tenant that Applied Digital bills; it carries real cost and is not the same as rent. - **Tenant recoveries** — $13.3m. Costs the tenant reimburses; they come with matching expenses. - **Net operating income** — $58.8m, an 89% margin on base rent. This is the company's own measure of what the live halls earn after running costs. **Our arithmetic.** Base rent was 25% of AI hosting revenue (65.8 ÷ 262.6) and fit-out was 70% (183.5 ÷ 262.6). The headline +322% revenue growth includes about $157m of extra fit-out billing out of a $261m rise (341.9 − 80.9), about 60%, and fit-out is not recurring rent. Contract value per megawatt: $36bn ÷ 1,410 MW is about $25.5m a megawatt across the base terms (36,000 ÷ 1,410). The Delta Forge 2 lease alone implies about $24.8m a megawatt (5,200 ÷ 210), or about $1.65m a megawatt a year over 15 years. Those are rough yardsticks: leases differ in length and terms. Funding sits on the other side. Debt was about $6.38bn (long-term $6.26bn plus $0.11bn current) against $2.95bn of cash. Interest expense in the quarter was $77.4m, larger than net operating income of $58.8m. That is a snapshot of build-stage financing: the debt also pays for halls that are not yet earning rent. In the quarter the company closed $1.59bn of 7.000% senior secured notes due 2031 to fund the third 150 MW building at Polaris Forge 1 and to repay a $300m bridge. **Who gets paid.** Applied Digital, from rent that starts at handover. Contractors, from fit-out and construction. Lenders, from 7.000% notes. **Who pays.** CoreWeave and the hyperscaler tenants. Money sticks when a hall is live and the tenant is paying; until then the revenue is largely fit-out billing and the cost is interest. --- ## What limits it? Build clock first. Funding second. Tenant concentration third. 1. **A lease is not a live hall.** 1.41 GW is leased and 250 MW is live. The third Polaris Forge 1 building (150 MW), Polaris Forge 2 and 3, Delta Forge 1 and Delta Forge 2 are all in construction. The company expects initial operations at Polaris Forge 2 to lift North Dakota delivered capacity to 300 MW by the end of calendar 2026. 2. **The build is debt-funded and the interest runs first.** Interest expense of $77.4m exceeded net operating income of $58.8m. The model needs each handover to arrive before the debt cost outruns the rent. 3. **Few tenants carry the book.** The release names one tenant (CoreWeave) and describes the others as an investment-grade hyperscaler and a tier-one investment-grade hyperscaler. That second description covers three of the five campuses. 4. **The power supply is partly planned.** The 1,200 MW Base Electron gas plant is to be developed, not built. The Finland deal is up to about 1 GW of potential power capacity, which the company says limits its initial exposure. The honest uncertainty is timing and conversion. The release gives no handover dates for the campuses still under construction beyond the 300 MW end-2026 expectation, so we do not draw a dated line from 250 MW to 1.41 GW. --- ## Who else does this? Roles, not a league table. | Company | What it does | What makes it different | | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------------- | | **Applied Digital** | Builds AI campuses and leases them to a few large tenants | 1.41 GW leased; 250 MW live; about $36bn contracted | | **[Crusoe](https://www.sotkn.com/stack/neoclouds/what-does-crusoe-do/)** | Energy-first developer and GPU cloud | Develops campuses for hyperscalers and also rents GPU time | | **[Digital Realty](https://www.sotkn.com/stack/ai-data-centers/what-does-digital-realty-do/)** | Leases space in 310 data centres | $1.9bn signed-not-yet-paying backlog; 90.2% occupied | | **[Equinix](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/)** | Rents space and connections to many customers | $2.625bn Q2 revenue, about 90% recurring | | **[NEXTDC](https://www.sotkn.com/stack/ai-data-centers/what-does-nextdc-do/)** | Builds and runs data centres in Australia | 740.1 MW contracted, 175.0 MW billing | What separates them is who funds the build and how concentrated the tenants are. Applied Digital builds for a few large tenants on long leases. Equinix and Digital Realty rent finished halls to many customers. NEXTDC is the closest Asia-Pacific parallel: a builder with a large contracted book that has not started billing. --- ## What would change this view? The read on the model weakens if: - A Ready-for-Service date slips on a campus under construction while debt keeps rising. - The base-rent share of AI hosting revenue stays near 25% for several quarters, so the story stays fit-out billing. - A tenant renegotiates terms on a campus that is still being built. - The Base Electron gas plant is delayed or its output falls short of the power the later campuses need. It stays intact while handovers keep arriving on the stated clock, base rent grows as a share of hosting revenue, and debt cost stays covered by live-hall income. --- ## Practical takeaways - Applied Digital's model is Power → Build → Lease: secure power and land, build halls in phases, lease them to large tenants on long contracts. - As of 7 Oct 2026: 1.41 GW leased, 250 MW live, about $36bn contracted over base terms. - Our arithmetic: about 18% of leased capacity is live; base rent was 25% of AI hosting revenue; debt cost ran ahead of net operating income. - Funding: about $6.38bn of debt against $2.95bn of cash; $1.59bn of 7.000% notes closed in the quarter. - The stuck step is handover: leased megawatts earn nothing until they are live. --- ## FAQ **What does Applied Digital do?** Applied Digital designs, builds and operates large data-centre campuses for AI and other heavy computing, and leases them to big tenants. It had 1.41 GW leased across five campuses at 31 August 2026. **How does Applied Digital make money?** From base rent once a hall is live, fees for fitting the hall out for the tenant, and some cost recoveries. In the quarter to 31 August 2026, AI hosting revenue was $262.6m, of which base rent was $65.8m and fit-out services were $183.5m. **Who are Applied Digital's customers?** CoreWeave leases Polaris Forge 1\. The company describes the other tenants as an investment-grade hyperscaler (Polaris Forge 2) and a tier-one investment-grade hyperscaler (Delta Forge 1, Polaris Forge 3 and Delta Forge 2). It does not name them in the release. **Is Applied Digital a crypto miner?** Not in its main business now. It runs two sites that host crypto miners' machines, 106 MW in Jamestown and 180 MW in Ellendale, which earned $37.8m in the quarter. Its growth is in leased AI campuses. **How much of Applied Digital's capacity is live?** As of 1 October 2026, 250 MW of AI hall was live at Polaris Forge 1 against 1.41 GW leased at 31 August. That is about 18% (250 ÷ 1,410), our arithmetic. The company expects 300 MW across its North Dakota campuses by the end of 2026. **Is Applied Digital a good investment?** We do not make buy or sell calls, and nothing here is a recommendation. We can tell you what it does, how it gets paid and which numbers would change the picture. The decision is yours. --- ## Keep reading on the map - **The layer:** [AI Data Centers](https://www.sotkn.com/stack/ai-data-centers/) - **The term:** [What Is an AI Data Center?](https://www.sotkn.com/explained/what-is-an-ai-data-center/) - **Peers:** [What Does Digital Realty Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-digital-realty-do/) · [What Does Equinix Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-equinix-do/) · [What Does NEXTDC Do?](https://www.sotkn.com/stack/ai-data-centers/what-does-nextdc-do/) - **Tenants and neighbours:** [What Does CoreWeave Do?](https://www.sotkn.com/stack/neoclouds/what-does-coreweave-do/) · [What Does Crusoe Do?](https://www.sotkn.com/stack/neoclouds/what-does-crusoe-do/) - **The Wire:** [Applied Digital brings 75 MW online for CoreWeave](https://www.sotkn.com/wire/applied-digital-75-mw-online-coreweave-polaris-wire/) - **Where it happens:** [the US](https://www.sotkn.com/markets/us/) The members cut on a stuck step is already live: [What does Applied Digital's price assume about the build clock?](https://www.sotkn.com/analysis/applied-digital-build-clock-stuck-step-what-price-assumes/). This page stays the free Stack read of the Applied Digital model. ## Sean Writes Second Order by TKN — a plain-English map of AI infrastructure. Who gets paid, where money sticks, which step is stuck. Not investment advice. [Author page →](https://www.sotkn.com/author/sean/) · [Editorial standards →](https://www.sotkn.com/editorial-standards/) ## How we check this Figures come from Applied Digital's fiscal Q1 2027 results release (7 October 2026) and its 2 October 2026 release, and from the peer releases listed below, each dated. Where we work something out ourselves, the arithmetic is shown in full. The company does not name its hyperscaler tenants in these releases, so we do not. **Last reviewed:** 11 Oct 2026 · **Next review:** after the next campus Ready-for-Service print Spot an error? Tell us and we will correct it and note the change here. [Our editorial standards →](https://www.sotkn.com/editorial-standards/) ## References 1. Applied Digital, [Applied Digital Reports Fiscal First Quarter 2027 Results](https://ir.applieddigital.com/news-events/press-releases/detail/163/applied-digital-reports-fiscal-first-quarter-2027-results?ref=sotkn.com) (company), 7 Oct 2026 — 1.41 GW leased, 250 MW live, about $36bn contracted, HPC and hosting revenue, debt and cash 2. Applied Digital, [Applied Digital Brings an Additional 75 MW of AI Infrastructure Online at Polaris Forge 1](https://ir.applieddigital.com/news-events/press-releases/detail/161/applied-digital-brings-an-additional-75-mw-of-ai?ref=sotkn.com) (company), 2 Oct 2026 — Building 2 complete; 250 MW operational; 400 MW contracted at full buildout 3. Digital Realty, [Second Quarter 2026 Financial Supplement and earnings release](https://www.sec.gov/Archives/edgar/data/1297996/000110465926086270/dlr-20260723xex99d1.htm?ref=sotkn.com) (company, SEC exhibit 99.1), 23 Jul 2026 — bookings, backlog, 310 data centres, 2,799 MW occupied of 3,102 MW, Northern Virginia stake, debt 4. Equinix, [Equinix Reports Second-Quarter Results, Raises 2026 Guidance and Long-Term Outlook](https://www.sec.gov/Archives/edgar/data/1101239/000110123926000145/a991eqix-q226xpr.htm?ref=sotkn.com) (company, SEC exhibit 99.1), 29 Jul 2026 — revenue by line and region, adjusted EBITDA, debt, 2026 guidance, 2027–2029 outlook 5. NEXTDC, [FY26 Record Results and Record FY27 Growth Guidance (ASX release)](https://announcements.asx.com.au/asxpdf/20260827/pdf/073c04gt4ts40y.pdf?ref=sotkn.com) (company, ASX filing), 27 Aug 2026 — contracted and billing MW, forward order book, FY27 guidance, capex, liquidity, power position