Companies Are Spending Billions To Build Data Centers. The Timeline For Them To Pay Off is Fuzzy.

CoreWeave and Applied Digital are spending billions of dollars to expand AI computing infrastructure, but their latest financial results show how far cash generation still lags behind the investments required to build that capacity.

Together, the companies reported approximately $8.5 billion in property and equipment purchases during their most recent disclosed quarters. Their combined operating cash flow amounted to about $743 million over those periods, covering less than 9% of that spending.

The comparison is based on CoreWeave's quarter ended June 30 and Applied Digital's fiscal quarter ended Aug. 31. Both reported substantial revenue growth, but neither generated enough operating cash to finance its capital expenditures during those periods.

The figures offer a way to examine one of the central financial questions surrounding the AI infrastructure boom: how much capital companies must commit before their data centers begin generating enough cash to support expansion and repay investors.

CoreWeave reported second-quarter revenue of $2.58 billion, more than double the $1.21 billion generated a year earlier, according to its Aug. 11 earnings release. Its revenue backlog reached approximately $104 billion at the end of June, excluding more than $25 billion in additional customer commitments signed early in the third quarter.

Revenue backlog represents future amounts the company expects to recognize under customer contracts, subject to service delivery and other requirements. It is not cash already received or profit earned.

CoreWeave reported $679 million in operating cash flow during the quarter, compared with $6.42 billion spent on property, equipment and capitalized software.

That means operating cash flow covered approximately 10.6% of its capital expenditures. The difference between those two figures was about $5.74 billion.

CoreWeave also reported a $626 million net loss, compared with a $290 million loss a year earlier. Net interest expense reached $640 million, up from $267 million.

Despite the net loss, the company generated $1.51 billion in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, reflecting the substantial difference between its operating performance and expenses associated with financing and infrastructure.

CoreWeave expanded its active power capacity to 1.5 gigawatts and increased total contracted power to approximately 3.7 gigawatts.

To support that growth, the company raised more than $10 billion through unsecured debt and convertible bonds during the quarter, alongside other financing arrangements.

Its financial statements showed $35.1 billion in outstanding recourse and nonrecourse debt at June 30, excluding operating lease liabilities.

Those obligations create financing costs even before all the newly constructed infrastructure begins contributing revenue.

Applied Digital's latest results present a different stage of the same infrastructure expansion. The company reported revenue of $341.9 million for its fiscal first quarter ended Aug. 31, up 322% from the corresponding period a year earlier, according to its Oct. 7 earnings release.

However, its cash flow statement shows that the company spent approximately $2.07 billion purchasing property, equipment and other assets during the quarter.

Operating activities generated $63.9 million in cash. That covered only about 3.1% of its capital spending, leaving a difference of approximately $2.01 billion. The company ended August with $6.4 billion in debt and $3.7 billion in cash, cash equivalents and restricted cash.

Applied Digital also reported a $221 million net loss attributable to common stockholders, although adjusted EBITDA reached $64.4 million. Its expansion is supported by long-term agreements with major technology customers.

In June, Applied Digital signed a 15-year lease for 210 megawatts of capacity at its Delta Forge 2 campus, representing approximately $5.2 billion in contracted revenue over the base term.

That equates to an average of roughly $347 million annually across the contract's 15 years, before accounting for differences in when capacity becomes available and revenue is recognized.

The company has also been adding operational capacity at its North Dakota campuses. By Oct. 1, it had brought 250 megawatts of critical IT capacity into service at Polaris Forge 1 and expected to increase delivered capacity across its North Dakota operations to 300 megawatts by the end of 2026.

Calculating an investment payback period requires more than comparing construction costs with reported revenue. The relevant measure is how much cash the completed assets generate after operating expenses, maintenance spending and other costs.

Neither company's latest quarterly results provide a reliable basis for calculating a definitive recovery date for its entire infrastructure investment. At current reported levels, operating cash flow does not cover ongoing capital expenditures, leaving negative cash flow after those investments.

For CoreWeave, the $5.74 billion quarterly gap represents the difference between operating cash generation and infrastructure spending, not an amount that must necessarily recur every quarter.

Applied Digital's corresponding gap of approximately $2.01 billion is similarly affected by the timing of construction. Those differences matter because data centers generally require substantial upfront expenditure before customers can use the available computing capacity.

Once facilities become operational, customer contracts can begin generating revenue over several years. But financing costs, equipment replacement and further expansion can affect how much of that revenue becomes available to investors.