Applied Digital Secures Multi-Billion Dollar Backing for AI Infrastructure Push

Applied Digital has locked in the capital required for its next major phase of growth, finalizing a $2.15 billion debt offering. The funds will underpin a significant expansion of the company’s artificial intelligence data center infrastructure in North Dakota. This move, however, raises questions about the sustainability of such rapid growth given the substantial new debt and recent shifts among its major shareholders.

The secured notes, issued through subsidiary APLD ComputeCo 2 LLC, carry an interest rate of 6.75% and mature in 2031. Proceeds are earmarked primarily for the construction of the “Polaris Forge 2” campus, a facility designed to support an IT load of 200 megawatts. A key element providing stability for this project is its tenant structure. S&P Global Ratings notes that Oracle will occupy the site under a 15-year lease agreement, securing Applied Digital a long-term, predictable revenue stream.

Operational Momentum Amidst Capital Intensity

The company’s recent financial results reflect the scaling of its business model. For the second fiscal quarter of 2026, revenue from continuing operations surged 250% year-over-year to $126.6 million. Concurrently, its net loss was narrowed by 76% to $31.2 million.

Despite this operational progress, the stock has experienced volatility. This followed the February announcement that semiconductor giant Nvidia had exited its position as a shareholder. Meanwhile, S&P Global Ratings affirmed its ‘B+’ credit rating for Applied Digital, revising the outlook to positive. Analysts at the agency acknowledged the considerable leverage but viewed it as manageable within the context of the company’s high-profile tenant commitments, which also include CoreWeave.

Should investors sell immediately? Or is it worth buying Applied Digital?

A Strategy for Power Independence

A central pillar of Applied Digital’s strategy involves addressing the massive power demands of its AI data centers. Management is pursuing substantial independence from the public grid. In early March, partner Babcock & Wilcox received the final contract for a $2.4 billion project to build dedicated power generation capacity.

The plan involves four natural gas-fired units with a combined output of 1.2 gigawatts. This infrastructure is intended to supply the AI campuses directly. The approach is designed to circumvent potential capacity constraints in regional utility networks and could shorten the timeline for bringing new data center capacity online.

With the billion-dollar financing now secured and the first 100-megawatt building at the Polaris Forge 1 site already operational, the company’s focus shifts to execution. Stabilizing the balance sheet during the current fiscal year will depend heavily on the timely activation of new capacity and the consistent flow of contracted rental payments from its anchor tenants.