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Earlier this month, Applied Digital announced that its subsidiary priced a US$2.35 billion private offering of 9.250% senior secured notes due 2030 to fund construction and expansion of two major data centers at the Polaris Forge campus in Ellendale, North Dakota, while also planning to draw US$787.5 million from a perpetual preferred equity facility with Macquarie Asset Management.
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This large-scale debt and equity financing introduces significant new financial leverage and potential share dilution, reflecting the scale and capital demands of Applied Digital’s push into AI and HPC data center infrastructure.
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We’ll examine how the company’s ambitious use of debt and equity to accelerate data center growth impacts its investment narrative.
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To hold Applied Digital shares today, you must believe that its aggressive expansion into AI and high-performance computing (HPC) data centers will lead to sustained growth and secure major long-term contracts, outweighing substantial financial and operational risks. The recent US$2.35 billion debt and US$787.5 million equity financing were critical steps to fund this buildout, but do not materially change the most important short-term catalyst: successfully ramping capacity to meet existing hyperscaler contracts. The biggest risk remains execution under increasing financial leverage and customer concentration exposure.
Among recent announcements, the finalized 15-year, US$5 billion lease with a leading U.S. hyperscaler stands out as highly relevant. This agreement both supports the scale of planned data center investments and highlights the importance of delivering new capacity on time to underpin future revenue predictability–the core driver for Applied Digital’s current valuation. Despite these partnerships, investors should also be mindful of the elevated balance sheet risks and what could happen if growth assumptions are not met…
Read the full narrative on Applied Digital (it’s free!)
Applied Digital’s narrative projects $755.7 million in revenue and $102.2 million in earnings by 2028. This requires 73.7% yearly revenue growth and a $263.2 million increase in earnings from -$161.0 million today.
Uncover how Applied Digital’s forecasts yield a $43.70 fair value, a 85% upside to its current price.
APLD Community Fair Values as at Nov 2025
Simply Wall St Community members’ fair value estimates for Applied Digital span from US$2.89 to US$43.70, across 32 differing analyses. With financial leverage rising, revenue shortfalls could have outsized implications for future performance, take time to compare these varied viewpoints.
Explore 32 other fair value estimates on Applied Digital – why the stock might be worth less than half the current price!
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include APLD.
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