Applied Digital shares have climbed roughly 68% year-to-date, reflecting investor enthusiasm for its AI data center expansion. The stock also rallied more than 14% in a single session following news of a major chipmaker’s $2 billion equity injection into CoreWeave, Applied Digital’s anchor tenant. This performance underscores the market’s view that Applied Digital is well positioned to capitalize on surging demand for specialized GPU capacity.

At the end of its fiscal second quarter, Applied Digital carried approximately $2.6 billion in current and long-term debt against $1.9 billion in cash and equivalents. In November, a subsidiary issued $2.35 billion of senior secured notes with a 9.25% coupon due 2030 to fund new AI campus builds and refinance existing obligations. A subsequent development loan facility of up to $100 million from Macquarie Group further accelerates site readiness but adds to interest obligations in a persistently high-rate environment.

Applied Digital and CoreWeave have executed leases covering 400 megawatts (MW) of critical IT load at the Polaris Forge 1 campus in Ellendale, North Dakota. These agreements carry an anticipated $11 billion in contracted lease revenue, including roughly $7 billion from two initial 15-year leases. The first 100 MW of capacity came online in late 2025, with additional phases slated for mid-2026 and 2027, providing a multi-year revenue runway tied to a deepening strategic customer relationship.

Despite strong lease backlog growth, Applied Digital’s high leverage and elevated borrowing costs leave little margin for error. Across the AI infrastructure sector, hyperscalers have issued over $121 billion in bonds through Q3 2025 to fund expansion, highlighting the broader reliance on debt. Any delays in power delivery, tenant ramp schedules or lease monetization could strain debt service coverage. Sustained free cash flow generation will require disciplined capital allocation and flawless execution of the 400 MW pipeline.