Compare moats
Up to three covered companies, band by band. Every call is a curated editorial judgment, never a disclosed figure — and every band carries its cited basis.
| Applied Digital | Applied Optoelectronics | Microsoft | |
|---|---|---|---|
| Moat rating | none The FY2026 10-K (filed 2026-07-29) shows contracted revenue, not a demonstrated competitive edge. About 1,410 MW is leased under 15-year take-or-pay, non-cancellable base terms worth about $36.2 billion, but only about 100 MW of the roughly 1.5 GW that is contracted and either operating or under construction was operating and earning revenue at May 31, 2026, and Item 1A says "lessees may have the right to terminate applicable leases if there are significant delays in construction." Item 1A also concedes "We do not have the resources to compete with larger providers of similar products or services at this time," and the Competition section names 13 power-advantaged developers the company competes with. Signed leases give revenue visibility, but the filing does not show a durable advantage. | narrow FY2025 10-K (Item 1, 'Our Technology' and 'Competition'): AOI is vertically integrated down to its own laser chips, fabricated exclusively in Sugar Land, TX with a combined MBE+MOCVD process it believes is 'unique in our industry' and 'difficult and time-consuming for other vendors to replicate'; the same filing calls the optical networking market 'intensely competitive' with larger, better-resourced rivals (Coherent, InnoLight, Eoptolink, Lumentum et al.), so the process edge is real but not dominant — https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm | wide The FY2026 10-K (filed 2026-07-29) restates both structural mechanisms verbatim. On cost: the cloud business 'benefits from three economies of scale' — datacenters with 'significantly lower cost per unit than smaller ones', demand aggregation, and multi-tenancy that lowers maintenance labor. On ecosystem: 'A well-established ecosystem creates beneficial network effects among users, application developers, and the platform provider that can accelerate growth.' Both are load-bearing at the new scale — 'Microsoft Cloud revenue increased 27% to $214.4 billion' and 'Commercial remaining performance obligation increased 84% to $678 billion.' Rated wide but held below full confidence because the same filing still cautions that 'Barriers to entry in many of our businesses are low.' |
| Moat type | none The 10-K claims three advantages: power-advantaged sites (it believes securing power and interconnection ahead of demand is 'the principal constraint on new HPC capacity and a core differentiator for us from many of our competitors'), a standardized 'franchise-style' design, and hyperscaler master service and master telecom service agreements 'that are difficult to obtain.' The filing does not show any of them to be durable. Its Competition section says competition 'centers on securing and developing sites with access to large-scale, reliable, and cost-competitive power and interconnection' and names 13 power-advantaged developers going after the same leases, and Item 1A concedes it lacks the resources to compete with larger providers. Signed leases are take-or-pay and non-cancellable, so a tenant leaving for convenience owes 'the full remaining contractual value,' but that is contractual lock-in on each lease rather than a moat source, so no moat type is assigned. | intangibles ip FY2025 10-K (Item 1, 'Our Technology' / 'Intellectual Property'): the differentiation the company itself leads with is process know-how — proprietary MBE laser fabrication combined with MOCVD ('to our knowledge, we are unique in incorporating MBE processes in the production of communications lasers in high volume'), 199 issued U.S. patents plus 140 in China/Taiwan, and explicit reliance on unpatented trade secrets — https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm | network effects The FY2026 10-K keeps the ecosystem passage scoped to the firm: 'An important element of our business model has been to create platform-based ecosystems on which many participants can build diverse solutions. A well-established ecosystem creates beneficial network effects among users, application developers, and the platform provider that can accelerate growth.' That remains the one moat mechanism the filing asserts about Microsoft as a whole; the cost-of-scale passage stays scoped to 'our cloud business'. |
| Leadership | behind The 10-K makes no leadership claim and gives no ranking or share figure. Item 1A concedes "We do not have the resources to compete with larger providers of similar products or services at this time" and that some rivals have "substantially greater liquidity and financial resources than we do." Its Competition section places APLD against established operators (Digital Realty, Equinix), hyperscalers that build their own capacity, independent developers and 13 named power-advantaged developers (IREN, Cipher Digital, TeraWulf, Hut 8, Riot, CleanSpark, HIVE, Core Scientific, Bitdeer, Galaxy Digital, Fermi, Keel Infrastructure, MARA). | fast follower Bifurcated: the FY2025 10-K self-describes an 'industry-leading position in the CATV market' serving 'a majority of the largest CATV equipment manufacturers,' but in datacenter optics — its AI-relevant line — AAOI is not among the vendors LightCounting's March 2026 quarterly update credits with record 2025 results (InnoLight, Coherent, Eoptolink, Fabrinet, Lumentum), so company-level it reads as a fast follower chasing the 800G/1.6T leaders — https://www.lightcounting.com/newsletter/en/march-2026-quarterly-market-update-380 | co leader The FY2026 10-K asserts leadership nowhere. Its AI offerings 'compete with AI products from hyperscalers, as well as products from other emerging competitors and other open-source offerings, many of which are also current or potential partners' — one of a small set at hyperscale in cloud and AI, an incumbent in productivity and PC operating systems. |
| Pricing power | weak Item 1A says "Due to the limited number of hyperscalers, we expect that a limited number of customers will continue to account for a high percentage of our revenue for the foreseeable future," and that if customers' equipment usage declines or they discontinue use of its facilities, APLD "may be compelled to lower our lease prices in some instances or risk losing a significant customer." One customer was 59% of FY2026 revenue from continuing operations. Take-or-pay, non-cancellable terms protect contracted revenue over the base term, and Note 19 reports a $39.1M HPC Hosting segment profit on $385.3M of segment revenue in FY2026, but those terms are agreed with a small group of concentrated buyers. | moderate FY2025 10-K (MD&A cost/pricing discussion): gross margin fluctuates with 'decreases in average selling prices,' but in CATV — 53.8% of 2025 revenue — the company states 'we believe we face less downward price pressure than many of our competitors' due to the value of its outsourced design services; FY2025 gross margin was 30.0%, up from 24.8% in 2024 — https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm | strong The FY2026 10-K reports 'Gross margin increased $31.6 billion or 16% with growth across each of our segments', with 'Microsoft 365 Commercial revenue ... mainly affected by a combination of continued installed base growth and average revenue per user expansion'. The honest caveat: gross margin percentage 'decreased slightly driven by continued investments in AI infrastructure and growing AI product usage', with Microsoft Cloud gross margin down to 66%. |
| Summary | Applied Digital designs, builds and operates purpose-built, liquid-cooled HPC data centers, which it calls 'AI factories', and leases the capacity to CoreWeave and investment-grade hyperscalers. At May 31, 2026 its 10-K lists five campuses (Polaris Forge 1-3 and Delta Forge 1-2) with about 1,410 MW contracted under roughly 15-year take-or-pay, non-cancellable leases worth about $36.2 billion over the base terms. The filing claims three sources of advantage: it controls power-advantaged sites, it uses a standardized 'franchise-style' design built to deliver about 150 MW in about 14 to 18 months, and it holds hyperscaler master agreements that are 'difficult to obtain.' The same document shows how early the company is. About 100 MW was operating and earning revenue. One customer was 59% of FY2026 revenue from continuing operations. It competes with Digital Realty, Equinix, hyperscalers that build their own capacity and 13 named power-advantaged developers, and it concedes that it lacks the resources to compete with larger providers. Signed leases give long-dated revenue visibility, but the filing does not show a durable competitive advantage. | AOI is a vertically integrated fiber-optics maker whose FY2025 revenue of $455.7M split 53.8% CATV and 42.9% internet datacenter (FY2025 10-K). Its defensible core is laser-fab process IP (MBE+MOCVD, all chips made in Sugar Land) plus highly automated U.S. module production the 10-K pitches as a supply-chain-security advantage. The AI datacenter line is ramping hard — Q2 2026 was a fifth consecutive record revenue quarter at $191.9M with 800G shipments more than doubling sequentially and demand forecast to outpace capacity through mid-2027 (Q2 2026 release) — but AAOI is absent from LightCounting's list of vendors that set records in the $23.8B 2025 transceiver market (InnoLight, Coherent, Eoptolink), so it ramps as a challenger, not a leader. The moat is narrow and concentration-risked: Digicomm was 53.1% and Microsoft 28.8% of 2025 revenue (10-K). | One repeated model across segments — build a platform, attract developers and partners, monetize the ecosystem that forms — now compounding through the AI wave: FY2026 revenue rose 18 percent 'driven by growth in Microsoft Cloud', Azure and other cloud services grew 41 percent, and the commercial remaining performance obligation reached $678 billion, while the filing still concedes low barriers to entry in many businesses. |
| Chain position | Developer and landlord of power-advantaged, liquid-cooled AI data-center capacity, leased long-term to CoreWeave and investment-grade hyperscalers. | Upstream optics supplier to the AI buildout: sells 800G/1.6T transceivers into hyperscale datacenters (Microsoft was 28.8% of 2025 revenue; Oracle 12.4% in 2024) and lasers/turn-key HFC equipment into CATV via distributor Digicomm (53.1% of 2025 revenue), per the FY2025 10-K — https://www.sec.gov/Archives/edgar/data/1158114/000143774926005875/aaoi20251231_10k.htm | Hyperscale AI-infrastructure buyer and platform distributor: monetizes upstream compute through Azure, Microsoft 365 Copilot, and the developer ecosystem. |
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| Long-horizon vote | -0.20 at weight 0.20 · swarm neutral Editorial prior, not backtested. | +0.06 at weight 0.20 · swarm neutral Editorial prior, not backtested. | +0.35 at weight 0.20 · swarm bullish Editorial prior, not backtested. |