Applied Digital finished its fiscal year in May with signed leases covering 1,410 megawatts of critical information-technology load. The company, which builds and operates AI computing campuses in North Dakota and leases the power and buildings to cloud tenants, says those contracts represent about $36.2bn of take-or-pay revenue over initial 15-year terms. What it actually turned on during the quarter was one phase of one building — 75 megawatts declared ready for service. The distance between those two numbers is the entire investment case, and closing it costs money the company does not yet earn.

The gap between contracted and energized

The operating results were extraordinary. Fiscal 2026 revenue rose 183.7% to $611.3m; gross profit went from $22.7m to $157.7m. Yet the fourth quarter carried a $117.0m operating loss, and the full year lost $244.0m at the net line. Revenue beat consensus by roughly $164m and the shares fell 12.8% anyway, because total debt had gone to about $5bn from $2.7bn a quarter earlier and management put remaining build cost for the 1.4-gigawatt program above $10bn. In March a subsidiary priced $2.15bn of senior secured notes at 6.750%, issued at 98, to fund 200 megawatts. Diluted shares grew about 42% year over year.

So the share price fell 43.3% in three months, and the stock did not get cheaper. Applied Digital trades at 60.74x trailing gross profit, against 63.29x in early May: gross profit tripled roughly as fast as the price fell. That multiple sits on a -38.7% operating margin and a trailing free-cash-flow yield of -35.4%, and consensus does not model positive average earnings per share before fiscal 2029. Concentration is real too — CoreWeave holds all three leases at the first campus, 400 megawatts and roughly $11bn of committed revenue, backed since the quarter by springing parent guarantees and a $50m letter of credit after CoreWeave earned an A3 rating.

Why they all fell on the same two days

This is a business model funded by borrowing long against long leases, which makes the far end of the yield curve its cost of goods. Two sessions did most of the damage. On 29 July the Federal Reserve held rates and the Dow fell 1,153 points as the 30-year Treasury yield reached its highest since 2007. On 18 August the 30-year topped 5.33%, a 19-year high, and every one of the six US-listed data-center operators fell — VNET 16.9%, Keel 16.2%, WhiteFiber 10.8%, SharonAI 10.6%, Applied Digital 8.6%, GDS 4.9%. Across the month five of six fell, from Keel's 27.1% to Applied Digital's 9.5%.

Keel Infrastructure is the redomiciled successor to bitcoin miner Bitfarms, converting a 2.2-gigawatt power pipeline to AI. WhiteFiber rents GPUs and colocation and grew revenue 54% last quarter. SharonAI has traded only since February. All three are pipeline stories with no earnings to defend them.

The one whose price fell furthest below its numbers

VNET, a Chinese operator running wholesale campuses for internet and cloud tenants, is the divergence. Wholesale revenue grew 29.3% last quarter; capacity in service crossed a gigawatt for the first time at 1,007 megawatts, up 49.4%, with 73.9% utilized and mature sites at 92.5%. Adjusted EBITDA rose 25.4% to about $128m, with margin widening to 33.0%. The shares are down 32.3% in three months and sit 52% below their 12-month high, at 9.72x trailing EV/EBITDA. The check on that: free cash flow is deeply negative, and 2026 capex of RMB10-12bn — roughly $1.4-1.7bn — must be raised, which is exactly what a 5.33% long bond repriced.

GDS, the Shanghai-based colocation landlord, was the only member that held, and not because its quarter was good. Revenue grew 6.2%, down from 23.6% the prior quarter; gross profit fell 12.9%; adjusted EBITDA rose 2.5% on utility costs. What it has is demand and a different lender: backlog went from 450 to 757 megawatts on record first-half bookings of 470 megawatts, funded 60/40 debt to equity in an onshore Chinese bank market management called highly supportive, at 4.7x net leverage. It trades at 14.03x trailing EV/EBITDA and 1.37x book.

Applied Digital's uptrend broke in stages — its 50-day average crossed below its 200-day in late July, and by 20 August the decline was firmly established. VNET has been in a downtrend since 25 June. The businesses did not turn; the discount rate did.

The setup

Where it stands — Growth is intact at all three landlords; the long bond, not demand, repriced the equity over the past month. Would confirm — Applied Digital energizes materially more than 75 megawatts next quarter without new equity issuance. Would invalidate — A CoreWeave lease amendment, or GDS bookings falling short of its 1-gigawatt 2026 target. Watch next — Applied Digital's fiscal first quarter, due October, and its quarterly capex run-rate against roughly $600m guided. Valuation — Applied Digital 60.74x trailing gross profit, 42.67x forward, versus 63.29x in May; VNET 9.72x trailing EV/EBITDA, GDS 14.03x.