APLD Stock Jumps 10%, but $2.15B Notes for Polaris and $2.4B Power Guarantee Send Debt Soaring
Applied Digital shares are rebounding on improved sentiment and a major power project update, even as Nvidia’s exit and execution risks...
Quick overview
- Applied Digital shares are rebounding due to improved sentiment and a significant power project update, despite ongoing concerns from Nvidia's exit.
- The company has entered a $2.4 billion guarantee agreement for a power generation facility, crucial for its AI data center expansion.
- Recent financial results show a 250% revenue increase year over year, indicating operational progress, but sustained profitability remains uncertain.
- Execution risks persist due to high valuation metrics and the complexity of proposed restructuring plans.
Applied Digital shares are rebounding on improved sentiment and a major power project update, even as Nvidia’s exit and execution risks keep investors cautious.
Stock Under Pressure, Then a Rebound
Applied Digital Corporation (NASDAQ: APLD) has faced sustained bearish pressure in recent months. The stock’s weakness intensified after Nvidia disclosed in February that it had fully exited its $177 million position, a move that amplified concerns around valuation sensitivity and execution risk in AI infrastructure plays.
However, sentiment improved today as broader markets stabilized and Applied Digital announced a significant development tied to its long-term power strategy — a key pillar of its AI data center expansion.
$2.4 Billion Power Project Guarantee
On February 26, 2026, Applied Digital entered into a guarantee agreement in favor of The Babcock & Wilcox Company, unconditionally backing Base Electron, Inc.’s obligations under a design-build contract for a roughly $2.4 billion, 1.2-gigawatt power generation facility.
The plant is intended to support large-scale data center operations, potentially including Applied Digital’s own AI campuses. Securing dedicated power capacity is strategically critical in today’s AI infrastructure race, where energy constraints can limit expansion.
However, the structure carries meaningful risk:
- If Base Electron fails to perform, Applied Digital must step in and satisfy contractual obligations.
- The guarantee can be terminated upon certain financing milestones or via a termination fee of $50 million or $100 million, depending on timing and conditions.
- As partial consideration, Base Electron will issue 10% of its outstanding equity to Applied Digital.
Notably, Base Electron was formed by certain Applied Digital insiders to develop stabilized power infrastructure. The board’s audit committee and disinterested directors reviewed and approved the related-party arrangement, emphasizing its strategic rationale.
While the agreement strengthens long-term power security, it also introduces contingent liabilities and off-balance-sheet exposure.
Applied Digital Guarantees Major Power Project for Data Center Growth
DALLAS, March 04, 2026 — Applied Digital Corporation today announced that its subsidiary, APLD ComputeCo 2 LLC (“APLD Compute 2”), has priced a $2.15 billion offering (the “Offering”) of 6.750% senior secured notes due in 2031 (the “Notes”) at an issue price of 98%.
The Notes will be sold in a private offering to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The Offering is expected to close on or around March 10, 2026, subject to market and other conditions.
Technical Picture Improves, Then Falters
From a chart perspective, the recovery into January looked constructive as Applied Digital reclaimed key levels and pushed decisively above prior highs. The subsequent reversal, however, was sharp, with shares tumbling below $30 and breaking below the 100 SMA (green) which was acting as support. However the 200 daily SMA (purple) acted as support , and APLD stock price rebounded 10% higher today from it.
APLD Chart Daily – Can the 100 SMA Hold Again?
Now APLD is facing the 100 SMA from below. Without sustained confirmation from contract announcements or clearer visibility on cash flows, technical gains may struggle to hold. The 100 daily SMA (green) which has been acting as support and stands close to $30 might turn into resistance.
Nvidia’s Exit Shakes Confidence
Nvidia’s divestment had an outsized psychological impact. The chipmaker previously held over 7.7 million shares, and its ownership was widely seen as validation of Applied Digital’s AI ambitions.
Following the disclosure, Applied Digital stock opened with an 8% bearish gap, threatening to break below the $30 level. Technical risks point toward the $20 range if key support levels fail.
Although Nvidia also reduced stakes in other companies, the market reaction in Applied Digital was particularly sharp. High-growth infrastructure names often depend heavily on perceived endorsement from industry leaders, and the sudden withdrawal intensified scrutiny of Applied Digital’s valuation and execution roadmap.
Expansion Ambitions Raise Expectations
Applied Digital’s late-January rally was fueled by confirmation that construction had begun on a large-scale “AI factory” campus — tangible progress after months of planning.
The flagship Delta Forge 1 campus is designed to operate with approximately 430 megawatts of utility power, including about 300 megawatts dedicated to critical IT load. Initial operations are projected for mid-2027, with additional phases extending into 2028 and beyond.
These hyperscale campuses require:
- Significant upfront capital investment
- Reliable long-term power supply
- Multi-year construction execution
- Secured customer contracts
In the current market environment, scale alone is insufficient. Investors are demanding clear visibility into contract wins, utilization rates, and return on invested capital.
Improving Financial Momentum
Operationally, Applied Digital has shown progress. In fiscal Q2 2026:
- Revenue from continuing operations rose 250% year over year to $126.6 million.
- Net losses narrowed 76% to $31.2 million.
- Adjusted EBITDA turned positive at $20.2 million.
These results suggest that earlier capital deployment is beginning to generate operating leverage. Supporters argue that the AI infrastructure strategy is gaining traction and moving closer to breakeven.
Still, sustained profitability will depend on consistent revenue growth and disciplined cost control — particularly as capital intensity increases.
Valuation and Strategic Complexity
After surging more than 200% in 2025, Applied Digital entered 2026 with elevated expectations. At recent highs, shares traded near 30 times sales — a multiple that leaves little room for operational missteps.
Additionally, a proposed restructuring — including a potential spin-off of the cloud services unit and a merger involving Ekso Bionics to form ChronoScale — adds another layer of uncertainty. While such moves could unlock strategic flexibility, they also increase complexity during a period of fragile investor confidence.
Conclusion: Applied Digital’s new power guarantee underscores its ambition to secure long-term AI infrastructure capacity — a critical competitive advantage if executed successfully. The rebound in shares reflects renewed optimism that growth catalysts remain intact.
However, Nvidia’s exit, contingent liabilities tied to the power project, capital-intensive expansion plans, and elevated valuation metrics suggest that execution risk remains high. In a more disciplined market environment, investors are likely to reward clear contract wins, stable financing, and visible cash flow generation — while penalizing delays or cost overruns.
For now, opportunity and risk appear tightly intertwined.
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