Applied Digital Brings Second Polaris Forge 1 Building Fully Online, Adding 150 MW

What happened

Applied Digital has brought the second Polaris Forge 1 building fully online, adding 150 MW and bringing total operational capacity at Ellendale to 250 MW. This milestone aligns with management's 2H 2026 guidance for PF1 Building 2 and validates the near-term execution track record. The company previously had only 100 MW energized as of June 2026, so this represents a significant step-up in live, revenue-generating capacity under the CoreWeave lease. The incremental rent should begin contributing to recurring base rent, potentially improving the mix away from fit-out revenue. However, the larger valuation issue remains the financing and delivery of Polaris Forge 2 and Delta Forge 1, which are not addressed by this news.

Implication

The news reduces near-term execution risk for PF1 and supports the base case scenario, but it does not change the need for additional proof on PF2 and DF1. Recurring base rent should rise in fiscal Q2 2027 results, potentially shifting the revenue mix toward higher-quality rent. However, the stock may already reflect some of this milestone, and the next 3–6 months will be driven by financing announcements and construction updates for later campuses. Investors should maintain a cautious stance until there is clarity on PF2 asset-level funding and delivery timing, as those factors remain critical to justifying the current valuation. A sustained move above $34 would suggest the market is pricing in more execution certainty than yet demonstrated, while weakness toward $22 would offer a more attractive entry point relative to the base case value of $29.

Thesis delta

The thesis improves modestly as PF1 Building 2 has now been delivered on schedule, validating management's execution capability for near-term capacity. This reduces the probability of the bear scenario tied to construction delays, but does not alter the core concern that PF2 and DF1 financing and delivery remain unproven. The rating stays WAIT, with the next catalyst being a clear disclosure of recurring base rent growth and any PF2/DF1 funding milestone.