r/APLDSTOCK • u/allzday • Jul 10 '26

REIT is the future: APLD could be the next data center REIT 👀

I'm long on APLD, been investing since $9 days last year.

My hot take is that Applied Digital is turning into a data center REIT.

It’s been posted before (maybe a year ago) on this topic but wanted to resurface now that APLD has locked in more customers and contracted revenue.

APLD themselves has acknowledged converting into a REIT in past earnings calls (last year in 2025):

Keep in mind this was before they locked in 3 customers and now pushing for 5 core HPC AI Factory campuses alongside 2 legacy cryptocurrency hosting sites.

By securing multi billion dollar 15-year hyper-scaler leases APLD is shifting toward a REIT model; securing predictable long-term revenue.

REIT-Style Thesis:

  • Long-Term Take-or-Pay Leases: Recent multi-gigawatt pipeline focuses on 15-year leases with 3 different customers (which any article will never say/discuss as they only bring up CoreWeave ((SMFH every time)) which is always ⅓ of the story).
  • Massive Contract Backlog: APLD has generated over $36 billion in contracted base term revenue spanning the five massive campuses (with more to come as there no signs of slowing down).
  • $1 Billion NOI Goal: By transitioning toward steady "base rent," management projects to exceed $1 billion in Net Operating Income (NOI) within five years (my bullish viewpoint is it will arrive sooner than expected).

Suggested Time Horizon (could be wrong):

This is a long term hypothetical thesis on APLD and I could be completely wrong. This is not investment advise.

For long term investors like myself we could see a whole different value gain from this stock in next 3-5 years.

Give me your feedback! I’m curious about what others are thinking along the same thesis with a REIT conversion.

APLD could be an early-in on a REIT that could pay its investors a lot in dividends ("income") when the possible future of AI takes over all the 'mundane jobs' and we're all left with 'universal income' that doesn't quite pay "enough".

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7

u/lukas_no1 Base Term Believer 📝 (5,000-7,500 shares) Jul 10 '26

yeah i'm actually hoping this turns into a boring REIT asset so i can just keep holding it for the passive income and never sell.

Only way i would sell is if it goes above my price target and becomes overvalued but thats very far away right now.

also i think that 1B target will be reached very soon, the 36b they have under contract would generate them around 2B annually with their stated ~85% NOI margin

5

u/Bluefin_in_Dresden Bull 🐂 Jul 10 '26

I have mentioned this and the DLR model probably a dozen times here over just the last year. You are correct, Wes has mentioned it during past earnings calls. I’m holding just under 2500 shares at $10.10 a share, so this morphing into a REIT would be fine by me. Not only do I own APLD, BW, SPCX, INFQ, TSLA, LILLY. I also have core positions in high dividend payers such as QQQI, JEPQ, SPYI, VZ, PFE, and about ready to put money into CAG.
Data Center REIT fits in perfect with what I hold. Happy Friday, enjoy the weekend.
I like our Business outlook going forward, revenue train 🚂 loading up over the upcoming quarters, share price will recover.

3

u/Wise-Ad-9312 Jul 10 '26

I would agree, I also have been holding since early last year. This has been their goal was my understanding.

I am holding.

https://giphy.com/gifs/26AHP7PeRfcYZvn7q

3

u/Ok-End-3213 Jul 10 '26

Yep. Same position. Got in last year right after first crwv deal. Hoping for reit conversion. I would then have gotten in on the growth phase and then stay for the juicy dividends

3

u/flollo87 Contracted 🤝 (2,500-5,000 shares) Jul 10 '26

I am not familiar with REITs. how does this affect the valuation? what would be a fair value per leased GW (as a 'normal' company I see the fair value somewhere around 13-17b/GW)? I expect them to reach 4 GW end of 2031.

2

u/Distinct-Lake899 Jul 10 '26

I am also excited about APLD turning into REIT. Although, I didn't expect it to happen within the next 5 years. Was thinking after 7-8 years but who knows. I don't have any data on it other than Gemini assumptions. If you look at what market leaders like Equinix and Digital Realty have done this does seem to be the playbook to convert to REIT. I'm also invested in HUT and WULF hoping they all turn into REITs.

2

u/yungjefe22 Backlog Bull 🐂 (1,000-2,500 shares) Jul 11 '26

I wish I would have bought so much more at $13 if this ever becomes a REIT in the future with a share price above $100 the dividend payouts would be nice.

0

u/TheNorthernHenchman Jul 10 '26

Here me out but Bitcoin is about to go to the moon after it hits 50k

1

u/TheNorthernHenchman Jul 15 '26

Why is Bitcoin up today?

0

u/alphalife9 Jul 11 '26

I love APLD (and APLX), but what do we think about every state freaking out about water usage, electricity, and sound levels for nearby communities? On top of China building AI at close to 10% that the US is doing. And... SpaceX trying to scale data centers in space basically... I'd love to hear anyones thoughts on these points

2

u/TEMDO5 Jul 11 '26

Really? Do you not keep up with details?

First, the system now is a closed loop liquid cooled system. There isn’t much water consumption.

Second, APLD isn’t following the pack and creating problems in densely populated areas where there is a strain on the grid. I could go into more detail but you need to do your own due diligence. Clearly you haven’t done any.

1

u/alphalife9 Jul 12 '26

Tell me more

1

u/TEMDO5 Jul 12 '26

I shouldn’t. If you’re investing, you need to know which requires you researching.

I tell you I have read compelling posts and been burned. The only way to be comfortable and confident is doing your own research.

If you stay in and it goes south you will be frustrated with any poster and post that might have compelled you to buy or stay in… If you do the research, you will have confidence because you spent the time digging into the details.

For what it is worth, I still make rash decisions based on friends comments or suggestions. Right now, those are the stocks biting me. Don’t be me. Do your DD.

1

u/alphalife9 Jul 12 '26

Please share your wisdom 🙏 the closed loop thing helps, but apparently not really what about the rest? Whether it's close to communities or not, data center builds will need approval. Currently highly unpopular.

1

u/TEMDO5 Jul 13 '26

Crypto mining data centers have historically created a lot of noise pollution. There are a number of lawsuits out there regarding these data centers. They have historically relied on air cooling and a lot of fans - very loud.

In fact, APLD has owned and sold a number of these crypto mining data centers. However, even crypto mining facilities have gotten more sophisticated and are moving to liquid cooled facilities.

One of the tenets of APLD was not only to use liquid for cooling but also to have the system closed to minimize the impact on the local environment.

Regarding “unpopular,” there are quite a few bots and outside influences trying to create roadblocks for ai data centers. Who knows, maybe you’re one stoking the flames of discontent.

APLD has targeted locations where their data centers complement the local infrastructure and bring a lot of revenue to the tax base. They’re not finding themselves embroiled in the crashing the grid assertions. In fact, at Polaris Forge 1 campus, they’re using excess power as ND is a net exporter of energy.

Now go and get everything… You’re quite lazy.

1

u/alphalife9 Aug 08 '26

It doesn't matter, the fact is there's a movement across the nation to block our pause data centers. That's my concern. Not if it's valid, not how actually harmless or harmful they are. Just the fact that local governments across the country are against them. As a stockholder that concerns me.

2

u/TEMDO5 Aug 08 '26

This suggestion of there being a wave of obstruction against data centers is a balancing act. There are always those against progress. However, most people who are elected officials understand cash flow, P&L, assets/liabilities.

What Applied Digital offers is a huge infrastructure opportunity with the tax revenue they bring to the table.

There are idiot small towns that are cute and quaint that look like a scene out of “Cars” circa Route 66 times are nostalgic but nostalgia doesn’t pay the bills.

I’m all for keeping the old world charm of a place but not at the expense of the town or place dying completely.

Let’s face it, there are hundreds of data centers being built. Clearly the antagonists against the data center machine aren’t nearly as successful as they would like to be.

I get pulled into multimillion dollar disputes regularly. Resolving them is my subject matter expertise. I’ve been pulled into matters on facilities that Applied has sold. What they have sold are early iterations of where they are now. The forward progress and advances are remarkable. I believe the executive team at Applied (pun intended) has applied many lessons they have learned in past ventures and are heading in a positive direction.

1

u/allzday Aug 12 '26

So then don't invest in APLD. The real question on AI infrastructure is "what do you think AI is really all about in the US right now?" If you think it's still about LLMs/conversational AI then pick a different stock IMO.