Massive News: Applied Digital's $2.15 Billion AI Deal Could Supercharge the Stock, but Is It Too Late to Buy?
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Massive News: Applied Digital's $2.15 Billion AI Deal Could Supercharge the Stock, but Is It Too Late to Buy?
March 25, 2026 — 10:40 am EDT
Written by
Manali Pradhan for
The Motley Fool->
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Key Points
- Applied Digital is raising capital against a long-term hyperscaler contract to fund AI infrastructure growth.
- The company’s $2.15 billion financing strengthens its ability to scale in a power-constrained AI market.
- Applied Digital has a clear roadmap to scale toward multi-gigawatt capacity.
- 10 stocks we like better than Applied Digital ›
Artificial intelligence (AI) investing is increasingly shifting away from chipmakers and model developers toward the physical infrastructure required to run AI workloads at scale. Data center facilities, raw compute capacity, and power access are emerging as key bottlenecks in the global AI infrastructure buildout.
Image source: Getty Images.
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Applied Digital (NASDAQ: APLD) is well positioned to benefit from this transition. Its recently announced $2.15 billion AI deal is already garnering significant attention. Understanding this deal better can help us analyze the stock's upside potential.
Exploring the $2.15 billion AI deal
Applied Digital has raised $2.15 billion through a private high-yield bond offering to fund the development and construction of 200 megawatts of data center capacity at its Polaris Forge 2 data center campus in North Dakota. The company has already leased this capacity to Oracle over roughly 15 years, generating about $5 billion in revenue. This dynamic makes the deal similar to project-backed infrastructure financing, in which capital is raised against an asset with committed demand.
Since this new debt is secured against the Polaris Forge 2 project's assets and supported by its contracted lease, it allows Applied Digital to fund expansion without relying extensively on its corporate balance sheet. At the same time, the company has also guaranteed to offer funding if needed to deliver the Polaris Forge 2 project on schedule. The structure of this deal is important, as it has converted a signed but not yet revenue-producing contract into a fully funded project with a clear path to revenue generation.
Applied Digital has also leased another 400 megawatts of data center capacity at the Polaris Forge 1 campus to CoreWeave for $11 billion in anticipated revenues over the next 15 years.
Multiple growth tailwinds
Management has highlighted that the hyperscaler spending on AI infrastructure now exceeds $400 billion annually, with companies competing aggressively for sites with adequate power availability. Applied Digital benefits from its early positioning in North Dakota, where it has secured sites with cost-effective energy, ample land for expansion of existing sites, and the potential to develop larger campuses as additional power comes online. The company is also working with Babcock & Wilcox on power generation solutions, which could add 1.2 gigawatts of capacity in the coming years.
Applied Digital has already drawn almost $900 million from Macquarie Asset Management's $5 billion preferred equity facility. The $2.15 billion bond financing deal shows that the company has access to multiple institutional funding sources. The project-financing type deal structure has also highlighted the company's ability to fund expansions without relying entirely on equity markets.
Applied Digital is scaling beyond its Polaris Forge campuses. The company has started work on the 430-megawatt Delta Forge 1 campus in the southern U.S. market, designed to support up to 300 megawatts of computing capacity. The company expects initial operations to commence in mid-2027.
Management expects to grow its overall data center capacity to expand to over 5 gigawatts in the next five years.
Risks to consider
Despite the strong opportunity, Applied Digital remains a capital-intensive business with high execution risks. The company's future growth trajectory depends heavily on timely project delivery. Any delays in construction, power availability, or tenant deployment across the large Polaris Forge 2 campuses can affect the overall profitability of the company in the long run.
The $2.15 billion deal at a 6.75% coupon rate has added over $140 million in annual interest expense for Applied Digital, while lease revenues will ramp over time. The mismatch in debt obligations and cash inflows further highlights th