u/OceansHungryGrasp

Transcript

Highlights:

• Expected 250 megawatts of expansion leases to be executed by calendar year end at materially higher pricing (15%+) and potentially longer durations compared to prior leases.

• Agreement with Base Electron that covers an approximately 1,200-megawatt natural gas facility adjacent to PF3 with deliveries expected to begin in 2030.

• Expected 300 megawatts of total critical IT online across North Dakota by the end of this calendar year (first 50MW at PF2).

• Same framework for future funding: preferred equity from Macquarie Asset Management followed by project-level debt, which allows Applied Digital shareholders to retain a majority ownership stake in each site.

• Chasing flexible financing so they can immediately refinance after construction with minimal penalties.

• Finland build cost will be similar, but longer delivery times due to regulations. First 100MW available in 2028 and will ramp up to 1GW till 2031. Macquarie deal is limited to NA.

• They think they can ramp up construction to have 2GW live by the end of 2028, possibly delivering 1GW per year in 29/30.

• Chronoscale will significantly increase capacity but that will be outside of the large-scale APLD sites for the coming years. APLD remains focussed on large scale hyperscalers contracts, but use their knowledge base to help secure capacity for Chronoscale.

Any senior secured notes will still be priced better than previous offerings.

As we're currently still only chasing investment-grade hyperscalers and Oracle already is the tenant for PF2, the tenant for the last 3 leases is either Meta, Amazon, Google or Microsoft.

Oracle has by far the worst investment-grade out of these 5, so even a hike of 50 basis points would mean we're still under the 6.75% of the PF2 offering. A hike of 50 basis point is out of the question anyway as we're either looking at 25 basis points or nothing. Also keep in mind the notes carry fixed coupon rates, so past offerings are not affected at all.

Obviously we rather have no rate hikes at all, but it's not as doom and gloom as it's made out to be. Mid September last year we were already trading over $20 and we've seen 3 rate cuts since. Company is in a much better place as we were back then.

https://preview.redd.it/7t3fk7q3d6mh1.png?width=1009&format=png&auto=webp&s=7dd2f0a4575a047d74b6d31472565dc97303615a

Nothing wrong with the company, majority of tickers in this sector is down about the same amount from ATH's. Good upside to the lowest price target and by far the highest upside to the average price target. In Q2 27 we'll have half our currently contracted capacity online already, just be patient.

Prices taken from market close.

> Our AI business surpassed $37 billion ARR, up 123%. > > We are at the beginning of one of the most consequential platform shifts that will change the entire tech stack as agents proliferate and become the dominant workload. > > This will drive TAM expansion and change the value creation equation across the entire economy. > > To capture this opportunity, we are executing against two priorities: > > First, we are building the world’s leading cloud & AI infrastructure for the agentic computing era. > > Second, we are building high-value agentic systems across core domains, such as productivity, coding, and security. > > These two layers reinforce each other. And we are focused on driving competitive value and differentiation for customers across each so they can eval-max their outcomes.

Full Microsoft earnings call transcript for those interested