Applied Digital is in the middle of the most consequential business model transition in its eight-year history, and the Q3 FY2026 print filed in April 2026 is the first quarterly report that actually shows what the post-Cloud company looks like as a pure-play hyperscale developer. For the three months ended February 28, 2026, total revenue reached $126.6 million, more than double the $52.9 million printed in the year-ago quarter, and the HPC Hosting segment generated $71.0 million of that figure against zero revenue in the prior-year period. The structural shift in revenue mix, from a legacy crypto-mining host that ran at roughly $35 million a quarter to a builder and operator of AI Factory campuses with multi-gigawatt pipelines, is the load-bearing observation of this report.
The single thesis is straightforward. Applied Digital has now signed three long-dated hyperscale leases covering more than $23 billion of total contracted revenue, including the $7.5 billion Delta Forge 1 lease announced April 23, 2026 with a new U.S. based high investment-grade hyperscaler, and the company is funding the associated 400-plus megawatt buildout with a layered capital stack anchored by a $5 billion-plus Macquarie-led project equity partnership and $2.7 billion of long-term debt. The market is pricing APLD for the leases to be signed; we read the equity as priced for the leases to be signed AND delivered on schedule, with execution at Polaris Forge 1 and the Ellendale data center campus as the gating variable. Adjusted EBITDA of $107.2 million for FY2026 (fiscal year ended May 31, 2026) confirms the model works at modest scale, but the equity is paying roughly 90 times trailing Adjusted EBITDA for a build that does not meaningfully contribute to revenue until late calendar 2026.
The single load-bearing risk is execution on the $1.6 billion of construction-in-progress that sits on the balance sheet as of February 28, 2026, with a further $1.4 billion of capitalized equipment and $1.7 billion of unrestricted cash earmarked to fund the pipeline. The falsifiable clock is the next two data points: the Q4 FY2026 print (the first quarter reported on a Cloud-divested basis, expected in late August 2026), and the commissioning of the first phase of Polaris Forge 1, where management has guided to initial operations in mid-calendar 2027 for Delta Forge 1. If either of those arrives late, the equity compresses on the multiple before the earnings arrive. The asymmetry investors should price is that a single on-time Delta Forge 1 commissioning with a fresh hyperscaler announcement at Polaris Forge 1 Building 3 supports a meaningful multiple expansion toward the $50-plus per share range, while any combination of construction slip and softer-than-expected FY2027 capex absorption would compress the equity toward the mid-teens given the premium valuation already embedded in the tape.