Applied Digital Craters 17%: Is the AI Data Center Debt Party Over?

7 hours ago 5

Rich Duprey

Tue, December 16, 2025 astatine 8:41 AM CST 4 min read

Applied Digital (APLD) plunged 17.5% with nary company-specific quality aft gaining 200% year-to-date. Applied Digital designs and operates AI information centers.
Applied Digital issued $2.35B successful 9.25% elder secured notes to money enlargement and refinance debt. The institution relies heavy connected CoreWeave arsenic its main tenant.
Hyperscalers issued $121B successful bonds successful Q3 2025 for AI infrastructure. This is implicit 4 times the anterior five-year yearly average.
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Applied Digital (NASDAQ:APLD) has been 1 of the standout performers successful 2025, delivering gains of astir 200% year-to-date. The institution designs, builds, and operates next-generation information centers optimized for high-performance computing and AI workloads. Its beardown show positioned it arsenic a cardinal holding successful Nvidia's (NASDAQ:NVDA) "secret" concern portfolio focused connected AI ecosystem companies.

While astir holdings successful that portfolio declined sharply -- resulting successful an wide 30% driblet successful worth since the extremity of Q3 2025 -- Applied Digital was the outlier, with Nvidia's involvement rising 208% successful full worth to implicit $239 cardinal successful aboriginal December. This resilience helped shield the portfolio from adjacent steeper losses during a broader AI infrastructure pullback.

However, that changed yesterday erstwhile Applied Digital shares plunged 17.5%, closing beneath $23 per share, with nary evident company-specific quality triggering the decline.

Applied Digital's accelerated enlargement into AI-focused information centers has required important financing. In its fiscal archetypal quarter, the institution reported $687 cardinal successful existent and semipermanent indebtedness alongside $74 cardinal successful currency and equivalents, but successful November 2025, a subsidiary priced a $2.35 cardinal offering of 9.25% elder secured notes owed 2030 to money caller facilities and refinance existing obligations. The indebtedness is seen arsenic riskier due to the fact that Applied Digital relies heavy upon CoreWeave (NASDAQ:CRWV) arsenic its main tenant.

Investors are increasing uncomfortable with this rising level of leverage, peculiarly for a institution inactive reporting nett losses contempt gross growth. Analysts enactment that Applied Digital's exemplary relies connected flawless execution of semipermanent leases -- specified arsenic multi-billion-dollar contracts for its Polaris Forge campuses -- to work indebtedness and execute profitability. Delays successful powerfulness delivery, tenant ramp-ups, oregon shifts successful hyperscaler request could strain currency flows.