SCHEDULE 13G: CoreWeave Acquires 5.5% Stake in Applied Digital Through Strategic Data Center Lease Warrants

CoreWeave, Inc. has disclosed a 5.5% beneficial ownership stake in Applied Digital Corporation, acquired through vested warrants issued in connection with new commercial data center lease agreements.

Summary

• CoreWeave, Inc. (the "Reporting Person") has filed a Schedule 13G, disclosing beneficial ownership of 13,062,521 shares of Applied Digital Corporation's Common Stock.
• This ownership represents 5.5% of Applied Digital's outstanding Common Stock, calculated based on 224,717,713 shares outstanding as of April 11, 2025.
• The shares are issuable upon the exercise of vested warrants (the "Initial Warrant") directly owned by CoreWeave, Inc.
• The Initial Warrant was issued on May 28, 2025, in connection with commercial data center lease agreements entered into between CoreWeave and certain subsidiaries of Applied Digital.
• The exercise price for the Initial Warrant is $7.19 per share, subject to adjustment.
• Applied Digital has agreed to file a resale registration statement with the SEC to register the resale of shares issuable upon exercise of the Initial Warrant.
• The Letter Agreement also provides for the potential issuance of additional warrants ("Additional Warrants") if CoreWeave expands its contracted-for capacity across Applied Digital's data centers.
• Both the Initial Warrant and any Additional Warrants are subject to a beneficial ownership limitation to comply with Nasdaq Listing Rules.

Sentiment

Score: 7

Explanation: The document indicates a significant strategic partnership and long-term commercial agreements for Applied Digital, which is generally positive for its business outlook. However, the issuance of warrants introduces potential future dilution for existing shareholders.

Positives

• Applied Digital has secured significant commercial data center lease agreements with CoreWeave, a major player in high-performance computing and AI cloud infrastructure, indicating strong demand for its services.
• The partnership with CoreWeave could lead to long-term revenue streams and potential future expansion through the issuance of Additional Warrants.
• The transaction demonstrates Applied Digital's ability to attract and partner with leading technology companies.

Negatives

• The issuance of warrants, upon exercise, will result in dilution for existing Applied Digital shareholders.
• The exercise price of $7.19 per share for the Initial Warrant may be below the market price at the time of exercise, further contributing to dilution.

Risks

• Potential dilution of existing shareholders' equity upon the exercise of the 13,062,521 vested warrants.
• Future dilution risk from potential Additional Warrants if CoreWeave expands its contracted capacity.
• Reliance on CoreWeave for a significant portion of data center capacity utilization and future growth.

Future Outlook

Applied Digital is expected to file a resale registration statement with the SEC to register the shares issuable upon exercise of the Initial Warrant. There is also a provision for the issuance of Additional Warrants to CoreWeave in the future, contingent on CoreWeave expanding its contracted-for capacity across Applied Digital's data centers, indicating potential for continued strategic partnership and growth.

Industry Context

This filing highlights the increasing demand for data center capacity, particularly for high-performance computing and AI workloads. CoreWeave, a specialized cloud provider for AI, is securing infrastructure from Applied Digital, a data center operator, underscoring the critical role of physical infrastructure in the rapidly expanding AI industry. This transaction reflects a trend of strategic partnerships between AI companies and data center providers to ensure access to necessary compute resources.

Stakeholder Impact

• Shareholders: Potential for dilution due to the exercise of warrants, but also benefit from a strengthened strategic partnership and long-term revenue visibility.
• Customers (CoreWeave): Secures critical data center capacity for its AI and high-performance computing operations.
• Employees: Potential for increased business activity and stability due to long-term contracts.

Next Steps

• Applied Digital Corporation is obligated to file a resale registration statement with the U.S. Securities and Exchange Commission to register the resale of the shares issuable upon exercise of the Initial Warrant.
• Potential future issuance of Additional Warrants to CoreWeave, Inc. if CoreWeave expands its contracted-for capacity with Applied Digital.

Key Dates

Keywords

Applied Digital Corporation, CoreWeave Inc., SEC filing, Schedule 13G, beneficial ownership, warrants, data center lease agreements, common stock, dilution, strategic partnership, AI cloud, high-performance computing