Applied Digital vs. IREN: Which Technology Stock Is a Better Buy in 2026?

The case for Applied Digital

In its latest annual report, Applied Digital highlighted its design and operation of digital infrastructure for AI and cloud workloads, positioning it among tech stocks focused on North American data centers. The company primarily focuses on its AI Factory campuses, where the flagship Polaris Forge 1 site is fully contracted to CoreWeave. Customer concentration like this adds a layer of risk to the business, as a single entity drives a huge portion of revenue.

In FY 2026, revenue reached nearly $611.3 million, representing growth of roughly 183.7% compared to the previous year. This massive surge was driven by the expansion of its high-performance computing segments. The company reported a net loss of close to $244.0 million, resulting in a negative net margin of approximately 39.9%, a metric that shows what percentage of revenue remains as profit after all expenses.

As of its May 2026 balance sheet, the current ratio is 4.0x, indicating the company has four dollars in current assets for every one dollar in short-term liabilities. The debt-to-equity ratio, which compares total debt to shareholder equity, is roughly 2.9x. Note that stock-based compensation represented roughly 245.5% of operating cash flow, meaning reported cash generation is heavily inflated by this non-cash add-back.

The case for IREN

According to its latest annual report, IREN is building next-generation data centers and AI cloud infrastructure while transitioning from legacy Bitcoin mining. It recently secured a five-year, nearly $9.7 billion contract with Microsoft for data center capacity. Additionally, IREN signed a five-year cloud services agreement worth roughly $3.4 billion with Nvidia to support its ongoing expansion.

In FY 2026, revenue reached close to $707.0 million, which is an increase of roughly 41.1% over the prior year. The company reported a net loss of nearly $702.6 million, leading to a negative net margin of approximately 99.4%. This reflects the complex nature of transitioning between two energy-heavy business models and managing the associated growth costs.

According to its June 2026 balance sheet, the current ratio is approximately 3.6x, which suggests it has sufficient short-term assets to cover its immediate obligations. The debt-to-equity ratio is close to 1.9x, showing the company uses nearly two dollars of debt for every dollar of equity. Free cash flow for the year was roughly negative $2.2 billion as the company scales its future infrastructure offerings.

Risk profile comparison

Applied Digital faces significant customer concentration, making it highly dependent on a small number of partners. It requires intensive capital and relies on frequent debt or equity financing to fund its projects. Most operations are concentrated in North Dakota, exposing the business to localized infrastructure risks and potential asset obsolescence from rapid technological shifts.

IREN struggles with financial instability, evidenced by its significant net loss in FY 2026. The transition from legacy Bitcoin mining to AI Cloud Services carries operational strain and potential regulatory scrutiny regarding energy usage. High leverage with nearly $7.98 billion in total debt and reliance on hardware suppliers like NVIDIA, Dell Technologies, and Supermicro add further layers of risk.

Valuation comparison

Applied Digital offers a lower P/S ratio based on sales over the past twelve months.

Which stock would I buy in 2026?

I'd go with IREN, though Applied Digital is doing interesting things in its own right. Applied Digital beat revenue estimates in its most recent quarter, a contract with CoreWeave provides long-term revenue visibility, and the company is building AI data center capacity at a rapid pace. For investors comfortable with early-stage risk, it is worth watching.

But IREN's transformation from Bitcoin miner to AI cloud infrastructure company is one of the more striking pivots in the market right now. It reported $4 billion in contracted annual recurring revenue for its 2026 capacity and has Microsoft as a customer. Nvidia has officially certified IREN as a reference-quality cloud provider for its most advanced chips, essentially giving it a stamp of approval that the company knows how to operate AI infrastructure at the highest level.

Both companies are losing money and spending heavily to build out infrastructure, so this is not a space for the faint of heart. But for a patient investor willing to sit through the volatility, IREN's contracted revenue base and blue chip customer relationships are a more solid foundation to build on over time.