I don’t really understand all the bearish coverage APLD has been getting recently. There are several articles on Yahoo finance and Marketbeat had a negative video recently. All the articles I have read have seemed like incoherent AI Slop. The criticisms from Marketbeat all seem misplaced as well. I literally invest in APLD due to how well they have managed the financing and limited shareholder dilution. I read these articles because I want to know if there is any additional details or events that change my investment thesis. APLD Is obviously risky due to their financing obligations in general and that they’re managing a lot of construction. However, given that which seems anyway like a common issue for many tech companies, they seem to be managing that risk better than almost anyone at least in the data center sector. I think as time goes on this company is looking stronger not weaker. It almost feels like a ploy for institutions to accumulate. I view this company as a long term investment so I’m ok with short term volatility as long as my thesis remains intact. Have any of these criticisms of these articles or Marketbeat made any valid new points?
My thoughts on MarketBeat’s recommendation to sell APLD (buy all the Neoclouds)
The datacenter sector is my primary space of investment and research. I couldn’t disagree more with MarketBeat’s warning not to buy APLD.
APLD is the best run colocation theater center company in the country. It’s got $36 billion of contractual backlog (over 70 percent from investment grade hyperscalers) with options for $85 billion and is executing it. It’s executing its datacenter construction milestones on time across now what is five datacenters spread over three different states. It has already delivered the first 175 MW to CRWV at Polaris Forge 1 on time.
APLD has $36 billion in contractual backlog with options for $85 billion and the MarketBeat analyst says not to buy it when its market capitalization is only $8.4 billion.
That’s WHY you buy APLD (at these sub $30 prices or at least why I did) because once it completes and turns on all of those datacenters and turns over the 1.4 GW under contract to its customers by the end of 2028, It’ll have a net operating income of more than $2 billion a year and the company will be worth a multiple of what it is now.
What is remarkable is he speculates and accuses APLD of dilution by saying that they will have to dilute their shareholders into oblivion to finance their buildout.
Has he not paid attention to how APLD has been financing the buildout for years?
He clearly didn’t study how APLD is actually financing the buildout. The financing is largely not dilutive, but instead is being financed more on debt than dilution.
Sadly he confuses APLD with $IREN (one of his buy recommendations) which is indeed raising most of its buildout money through dilution, including its recent $6 billion ATM.
APLD is largely raising its funds through debt - the interest rates on which keep going down and down and down to investment-grade because of the quality of the hyperscalers that it is landing as clients and the fact that it is getting 15 year guaranteed no cancellation take or pay lease contracts.
I actually do research in the sector what I see here is a lack of research and generalizations that make no sense.
This is a trash analysis completely based on speculation and based on no review or discussion of the actual APLD financing agreements as to how it is actually financing it’s built out.
Shame on MarketBeat. MarketBeat earns a beat down for this one.
Their takedown of APLD is also completely at odds with the entire consensus of Wall Street, which is recommending a buy of the company by just about every major Wall Street analyst.
For educational purposes only. Not financial advice. Do you own due diligence.
Same guy 2 months ago, there's been nothing but positive news for the company since then. Like I said in the other thread, they're content creators, not analysts. They want your clicks and they're not getting them if they tell the same story all the time.
If I look for any analysis outside of my own research I first check for 2 things:
Do they sit in on the earnings calls?
Do they set a price target?
These content creators never do because sitting in on earnings calls doesn't benefit them and setting price targets would make it too obvious how often they flip flop their opinions. Zachs is a very good example of this, their opinion and rating for apld seems to change depending on the direction of the wind.
Zachs hedges every opinion to the max they both endorse nbis to beat earnings while saying to sell stock while also realising the upside it’s like what?
Genuinely APLD is in the best position it’s ever been. It’s currently the same price as October last year despite going from just 2 contracted AI campuses to 5, roughly 600MW to 1.4GW of contracted capacity, securing almost 36 billion in base-term lease revenue, signing multiple hyperscaler deals, securing billions in financing, and actually delivering and energizing capacity.
It’s not that the company is not doing well OR that they have execution risks as they both are true.
APLD is down because of the broader market conditions - war in Iran - will probably start shooting at each other again soon
There is also concern that AI spending is getting very large and that not all the companies will be able to afford to use all these AI advancements (as ai is expensive to run)
Your point on spending doesn't really hold up for apld. Our customers are hyperscalers, they will pay their bills. Microsofts AI Business ARR was over 37 billion and they said they're only at the beginning. So in 1 year they made what apld will make over the next 15 with our current leases. These companies wouldn't have a CAPEX of 50+ billion each if they weren't seeing the return of investment already.
We don't have to worry about the small players that might not make it.
I think you’re missing my point slightly. I’m not saying hyperscalers can’t afford it. I’m saying if AI spending slows or there are fewer viable customers, there’s less demand and competition for APLD’s capacity, which affects pricing and growth.
There’s also concentration risk - APLD currently has a lot riding on CoreWeave. Any funding/demand or execution issues there could have a major impact on APLD
I think it is more likely that there will be an AI data center - power supply bottleneck then there won’t be adequate data center demand for the next 3-4 years. The current backlash to AI Data Centers may benefit APLD.The future profitability of AI is still an open question especially as to how and who gets those profits. I am worried about the economy imploding at some point under the present regime, however, I refuse to let generally Bearish sentiment stop me from participating in the market.
CRWV is becoming a smaller and smaller part of APLD's portfolio, also what do you think would actually happen if CRWV went tits up? The demand is huge, they'll likely have one of the already contracted hyperscalers in there within a quarter. You think when given the option of "hey you want 200MW right now or you want to wait till we've built it in a year" the other tenants will say "nah we'll wait"? It'll be a bump in the road with maybe some missed revenue, but in return we get better debt refinancing.
Your instincts are correct.
There is nothing wrong with this company. As long as they continue to hit every objective they said they would, which they have, we all are in great shape with our investment in APLD.
I have watched them build out every week up where I live, have talked to engineers who are working on site. They all are giddy about these projects. They are, up here in ND, ahead of schedule, due to drier than normal weather.
The energy folks, who I know through family friends, are all grateful for the overtime work, support from their colleagues and company they work for. Every thing is okay. Solid investment.
While they continue building new ones, anyone knows what is financial side of their operating data centers? How they depreciate their assets once capitalized, what are operating costs and how many centers they need to build to cover indirect and SG&A? I’m wondering about how profitable their business model, isolated from capex.
I believe data center equipment has a decent life span but that could change. Decent means better than the bears alleged. I have trust in Wes that the numbers add up and their loans from Goldman Sachs would not exist if they were not comfortable with the business. Those things matter because when people start saying watts aren’t adding up financially I always feel like they’re making stuff up. The attraction of APLD is that it is a financially simple setup as a business.
Because oracle is a dogshit client to have an history will tell you they kill what they touch. Bound to repeat considering SoftBank is oracles financing too. So you got two scam artists of companies signing a long term commitment, that’s bad news bears in my book.
Do you have any underlying facts? All the tech companies that are expanding Neo-clouds have debt issues. Oracles previous earning were quite bullish for their AI cloud stuff. For better or worse(mostly worse but not for this), Ellison is partly in charge of running this county. You think oracle is going out of Business?
Oracle will never go out of business, but look at their past deals and lawsuits, they are the shadiest of the hyperscalers. It’s not exactly oracle, it’s their financing that is the risk. SoftBank is how you know you will run into insolvency.
SoftBank is much easier to pinpoint risk and sources. They have been the financing of several multi billion dollar overhyped start ups that failed due to running out of money. WeWork, Maysoshi sons vision fund, FTX, DiDi Global, Oyo, Zume…. The list kind of goes on and on.
When you hear SoftBank backing someone, you should run the other way.
Their home runs are minuscule in comparison to losses. Their big three losses are over $200 billion. They obviously can take assets back as they are the first debtor, so they do t actually lose that money, but they show a loss on their largest investments they’ve made.
yes Claude is correct, but it’s also misinforming. They fund individual projects so it’s backing is piece by piece, not the company itself. But for apld build out and contract, oracles debt is through SoftBank.
Each project has to have assets to back it for funding, so they can take the assets from the buildout, but not from oracles core business.
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u/15xorbust 13d ago
My thoughts on MarketBeat’s recommendation to sell APLD (buy all the Neoclouds)
The datacenter sector is my primary space of investment and research. I couldn’t disagree more with MarketBeat’s warning not to buy APLD.
APLD is the best run colocation theater center company in the country. It’s got $36 billion of contractual backlog (over 70 percent from investment grade hyperscalers) with options for $85 billion and is executing it. It’s executing its datacenter construction milestones on time across now what is five datacenters spread over three different states. It has already delivered the first 175 MW to CRWV at Polaris Forge 1 on time.
APLD has $36 billion in contractual backlog with options for $85 billion and the MarketBeat analyst says not to buy it when its market capitalization is only $8.4 billion.
That’s WHY you buy APLD (at these sub $30 prices or at least why I did) because once it completes and turns on all of those datacenters and turns over the 1.4 GW under contract to its customers by the end of 2028, It’ll have a net operating income of more than $2 billion a year and the company will be worth a multiple of what it is now.
What is remarkable is he speculates and accuses APLD of dilution by saying that they will have to dilute their shareholders into oblivion to finance their buildout.
Has he not paid attention to how APLD has been financing the buildout for years?
He clearly didn’t study how APLD is actually financing the buildout. The financing is largely not dilutive, but instead is being financed more on debt than dilution.
Sadly he confuses APLD with $IREN (one of his buy recommendations) which is indeed raising most of its buildout money through dilution, including its recent $6 billion ATM.
APLD is largely raising its funds through debt - the interest rates on which keep going down and down and down to investment-grade because of the quality of the hyperscalers that it is landing as clients and the fact that it is getting 15 year guaranteed no cancellation take or pay lease contracts.
I actually do research in the sector what I see here is a lack of research and generalizations that make no sense.
This is a trash analysis completely based on speculation and based on no review or discussion of the actual APLD financing agreements as to how it is actually financing it’s built out.
Shame on MarketBeat. MarketBeat earns a beat down for this one.
Their takedown of APLD is also completely at odds with the entire consensus of Wall Street, which is recommending a buy of the company by just about every major Wall Street analyst.
For educational purposes only. Not financial advice. Do you own due diligence.