"Applied Digital ( NASDAQ:APLD ) has posted strong gains in 2026, rising nearly 68% year-to-date. The company has largely shaken off the concerns from last year over its heavy debt load used to finance rapid AI data center expansion. Yesterday, its stock surged more than 14%, closing at $41.35 per share, and Nvidia ( NASDAQ:NVDA ) deserves credit for the gain. Debt Remains a Growing AI Headwind"
"The AI data center business runs on capital. Applied Digital carried over $2.6 billion in current and long-term debt against $1.9 billion in cash and equivalents at the end of its fiscal second quarter after a subsidiary issued $2.35 billion of 9.25% senior secured notes in November that are due in 2030 to fund new facilities and refinance older obligations. That coupon reflects today's higher borrowing costs and underscores the leverage required to build power-hungry campuses ahead of revenue."
"Across the sector, the picture is similar. Hyperscalers issued $121 billion in bonds by the third quarter of 2025 - more than four times the prior five-year average - to finance AI infrastructure. Analysts at firms covering the space have highlighted the execution risks from the rising debt load: power delivery delays, slower-than-expected tenant ramp, and the possibility that AI capex budgets tighten. Applied Digital's model depends on long-term leases being signed and paid; any slippage directly threatens its debt service coverage."
Applied Digital has risen about 68% year-to-date in 2026 and its stock jumped over 14% to $41.35 per share. Nvidia-related market activity helped lift the share price. Applied Digital carried roughly $2.6 billion in current and long-term debt against $1.9 billion in cash after a subsidiary issued $2.35 billion of 9.25% senior secured notes due in 2030 to fund new facilities and refinance obligations. A Macquarie Group facility can provide up to $100 million for pre-lease planning and early construction. Sector borrowing surged, with hyperscalers issuing $121 billion in bonds by Q3 2025, increasing execution and debt-service risks tied to tenant ramps and power delivery.
Read at 24/7 Wall St.
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