Applied Digital Sinks 7%, IREN Tumbles 13% as Data Center Selloff Broadens Past One Name
A nine-figure writedown at one AI data center operator sent shockwaves through the entire sector Friday, and the stocks bleeding hardest have no bad news of their own to explain the damage.
AI data center pure plays are unwinding together Friday, with a fiscal 2026 impairment charge at IREN Limited (NASDAQ:IREN) dragging capex-heavy peers. The broadening move signals investors re-pricing the group’s transition costs across the cohort.
IREN stock is down 13% to $35.28 at midday, an acceleration from the 6% decline earlier in the morning. Meanwhile, the Global X Data Center & Digital Infrastructure ETF (NASDAQ:DTCR) is down 1% to $28.17, while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.18% to $769.72, so a macro-level explanation doesn’t account for today’s action in IREN stock.
Similarly, Applied Digital (NASDAQ:APLD) stock is down 7% to $25.55, while TeraWulf (NASDAQ:WULF) stock is down 7% to $15.39. Core Scientific (NASDAQ:CORZ) stock is down 7% to $16.39, matching the peer move.
Impairment at IREN Kicks Off the Rerating
IREN reported fiscal 2026 results after Thursday’s close, resetting how the market weighs its pivot from Bitcoin mining to AI compute. The company recorded a $638.8 million impairment tied largely to older mining equipment, producing a fiscal 2026 net loss of $702.6 million against an $86.9 million profit a year earlier.
The company’s total revenue rose 41.1% to $707 million, and AI Cloud revenue climbed to $128.8 million from $16.4 million. IREN closed the year with $7.62 billion in cash and equivalents, and management said its contracts target $4 billion of annualized revenue by year end.
Applied Digital, TeraWulf, and Core Scientific Follow the Selling
Earlier this morning the peer group looked steady, with Applied Digital off less than 1% and TeraWulf off 1%. By midday that read no longer holds. The sympathy selling has hit the group with roughly identical severity, and none of the three has issued fresh company news today.
Applied Digital was up 12% year to date through Thursday’s close, and management said at its fiscal Q4 2026 call that all current construction projects are on time and on budget. The company reported $36 billion of total contracted long-term lease value across five campuses and placed $1.59 billion of 7% senior secured notes, which the CFO said was “225 basis points inside our first placement.” Trefis flagged Applied Digital’s 229% revenue growth over the trailing twelve months in an August 27 note.
TeraWulf was up 44% year to date through Thursday’s close, while Core Scientific was down 15% over the past month heading into today. TeraWulf’s 20-year lease with Anthropic at its Kentucky campus targets $19 billion of contracted revenue, and Core Scientific’s initial AMD agreement covers 530 megawatts with more than $14 billion of base contracted revenue. Retail discussion has flagged financing and dilution risk at Applied Digital along with the absence of management commentary today.
Pure Plays Sink, Data Center Fund Barely Moves
The pure plays are down 7% to 12%, and the Global X Data Center & Digital Infrastructure ETF is down only 1%. The fund is a narrowly concentrated thematic product rather than a diversified fund, yet its data center REITs and semiconductor suppliers such as Equinix, Digital Realty Trust, and Micron Technology are absorbing today’s damage while the pure plays take the hit.
That gap signals the selling is concentrated in capital-intensive, capex-heavy operators, sparing broader data center exposure. Long-duration lease revenue and hyperscaler contracts still carry a premium, and the market is discounting the cost of getting there when a peer books a nine-figure writedown against decommissioned hardware (we profiled seven of the picks-and-shovels names behind this buildout, from power to cooling, in a free AI infrastructure report).
The valuation math adds fuel to the move. IREN carries a forward P/E ratio of 137x, while Applied Digital sits at a forward P/E ratio of 526x. High multiples on early-stage AI infrastructure revenue leave less cushion when a peer books a hardware writedown of this size.
What to Watch
Traders can watch for stabilization across the pure plays into the afternoon, with IREN’s price action likely setting the tone for the group. Applied Digital’s next earnings report is expected around October 7, the next hard catalyst that could reset the cohort. Moves in DTCR versus the pure plays could show whether today’s separation between the fund and its capex-heavy constituents holds.
Investors reassessing their exposure should right-size their positions given the group’s beta and financing sensitivity. A cautious approach can pair a small pure-play position with broader infrastructure exposure through DTCR, which trims single-name capex risk while keeping the AI infrastructure theme intact. Aggressive traders may want to wait for confirmation that IREN has found a level before adding to APLD, WULF, or CORZ.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.
His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.
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