Applied Digital Secures Major Funding for AI Infrastructure Push

Applied Digital is accelerating the development of its artificial intelligence data center network with a substantial new debt offering. The company finalized a $2.15 billion secured note issuance today, earmarked to fund the construction of new facilities in North Dakota. This aggressive expansion comes amid a complex backdrop of surging operational revenue and notable investor skepticism.

Operational Momentum and Financial Leverage

The company’s strategic focus on high-performance computing infrastructure is showing tangible results. The first building at its ‘Polaris Forge 1’ campus is now fully operational, delivering 100 megawatts of capacity to cloud provider CoreWeave. This ramp-up drove a remarkable 250% increase in revenue for the second quarter of fiscal year 2026, reaching $126.6 million.

To sustain this growth trajectory, Applied Digital’s subsidiary has arranged for $2.15 billion in financing. The notes carry an interest rate of 6.75% and mature in 2031. Proceeds are designated for the ‘Polaris Forge 2’ campus in Harwood, North Dakota, which will add 200 megawatts of IT load capacity aimed at meeting hyperscale client demand. The project has also secured capital commitments from Macquarie Asset Management.

While this move significantly increases the company’s debt load, management points to a substantial pipeline of contracted demand. Applied Digital holds agreements for a total of 600 megawatts, which analysts suggest could generate approximately $16 billion in leasing revenue over the contracts’ lifetimes. The central challenge remains executing this capital-intensive build-out without overextending the balance sheet, with profitability hinging on efficient scaling of the new capacity.

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

Market Concerns: Valuation and a High-Profile Exit

Despite the operational progress, investor sentiment has recently turned cautious. Shares declined 10.5% in a single day late last week, reflecting unease over the increased leverage. This apprehension was compounded by a disclosure from February revealing that AI chipmaker Nvidia had divested its entire position of 7.7 million shares in Applied Digital.

That exit precipitated a 19.5% stock price drop last month and has sharpened focus on the company’s valuation. With a price-to-sales multiple of 26, the equity trades at a significant premium to the sector average of 8. Market observers interpret this valuation gap as an indication that high expectations for AI-driven expansion are already fully priced into the stock.

The newly secured funding ensures the construction of Polaris Forge 2 can proceed, but it markedly raises the company’s financial leverage. Given the elevated valuation and Nvidia’s departure, the operational execution of the 600-megawatt project pipeline is now the critical factor that will determine the share price direction moving forward.