Prediction: This Data Center Stock Will Keep Sliding in 2027

Applied Digital (APLD) has witnessed a significant decline in its stock price since the start of 2026, despite the broader market's gains. The company, which initially focused on crypto mining, successfully transitioned to providing data center services for AI applications and now boasts a substantial $36 billion in upcoming revenue. However, a substantial portion of its leased capacity remains under construction, and there is no assurance of timely and budget-friendly completion.

Operating like a specialized developer and landlord, Applied Digital secures land, establishes power access, constructs data centers, and leases them out to tenants. The company's revenue has surged from $55 million in 2023 to $611 million in 2026, as it develops and prepares space for tenants, generating $184 million, and collects base rent amounting to $66 million.

With more than $20 billion in contracts, Applied Digital faces a credit risk as it strives to finalize financing for these projects. Its debt has skyrocketed from $2.6 billion in November 2025 to $6.4 billion by August 2026.

While Applied Digital has managed to secure reasonably favorable loan terms for its main tenant, CoreWeave, it has resorted to raising funds through expensive preferred equity at a 12.75% rate. The company's borrowing landscape is unfavorable, and future financing terms may not be much better. Although Applied Digital has delivered infrastructure on time, it now faces the challenge of bringing more than twice as much capacity online this year compared to the previous year.

Delays in project completion will result in accrued interest and mounting construction costs, potentially hurting future earnings. If Applied Digital secures more favorable financing terms than anticipated, its stock price may recover. However, given the current borrowing landscape, it is more likely that the company will resort to dilutive stock sales, which will likely continue to push the share price lower through 2027.