Rising Treasury Yields Pressure Applied Digital and Cipher as AI Infrastructure Debt Models Face Scrutiny
On September 1, both Applied Digital Corporation (NASDAQ:APLD) and Cipher Digital Inc. (NASDAQ:CIFR) experienced significant stock declines amid a rise in the 10-year U.S. Treasury yield to 4.79%. The drop highlighted vulnerabilities in AI infrastructure companies that rely on long-term contracts for future revenue but require heavy upfront investment and debt financing. Applied Digital reported $36.2 billion of contracted base-term revenue, while Cipher claimed $11.4 billion across its data-center leases. However, both firms face execution risks such as construction delays or budget overruns before cash flows materialize. Rising interest rates increase the cost of capital and reduce the present value of future earnings. Despite these challenges, hedge funds increased their holdings in both stocks during Q2 2026. Cipher also saw a notable short position covering nearly 16% of its float, indicating market uncertainty over whether leveraged AI infrastructure builders can deliver on economic returns.
Topics: AI infrastructure contracted revenue data centers debt financing Treasury yields