Applied Digital Closes $1.59B Bond Offering and Locks In North Dakota Power as Neocloud Ambitions Scale

A $1.59 billion private placement of senior secured notes, paired with utility supply deals and a contracted lease backlog reportedly exceeding $12 billion, positions Applied Digital as a serious AI infrastructure landlord — though the leverage required to get there is substantial.

Applied Digital closed a $1.59 billion private placement of 7.000% senior secured notes due 2031 — issued through its project subsidiary APLD ComputeCo 3 LLC — on or around June 20, 2026, marking one of the largest single debt raises in the neocloud sector to date. SEC filings from the same week reveal that a parallel subsidiary, APLD ComputeCo 2 LLC, completed its own private placement of 6.75% senior secured notes, together pointing to a deliberate tiered capital structure in which distinct special-purpose vehicles carry the financing burden of separate construction projects. The proceeds are directed toward an accelerating buildout at the company's North Dakota Polaris Forge campus, where Montana-Dakota Utilities announced a new electric service agreement covering Polaris Forge 3 — the latest expansion phase — on June 23, 2026. That a pre-profitability neocloud operator was able to place nearly $1.6 billion of project debt at sub-8% coupons says something about how the infrastructure capital markets have repositioned around AI demand.

The financing did not emerge without context. In June 2025, CoreWeave signed what was reported as a fifteen-year, $7 billion lease at Applied Digital's North Dakota facility for roughly 250 megawatts of capacity, one of the largest data center commitments by a hyperscaler-adjacent GPU cloud company on record. Four months later, in October 2025, Applied Digital disclosed a second long-term infrastructure lease, initially valued at $5 billion over fifteen years with an unnamed hyperscaler. SEC amendment filings submitted in June 2026 suggest the same arrangement has since been revised upward to approximately $5.2 billion, according to reports citing the 8-K/A disclosures, though the precise counterparty remains unconfirmed in public filings. The combined contracted lease value across these two agreements — if the cited figures hold — amounts to more than $12 billion, a backlog that materially underpins the debt-service obligations embedded in the new bond tranches.

Applied Digital's capital formation arc traces a steep climb that reflects the broader re-rating of AI infrastructure as an institutional asset class. In September 2024, Nvidia and a co-investor group injected $160 million into the company's GPU cloud division, providing balance-sheet support and a notable supply-chain endorsement from the world's dominant AI chip maker. January 2025 brought a more substantial commitment: a unit purchase agreement with Macquarie Asset Management for up to $5 billion, structured as infrastructure equity rather than debt and designed to fund the multi-gigawatt buildout the company had by then scoped. The January 2026 groundbreaking of Delta Forge 1 — a 430-megawatt AI factory campus at an undisclosed southern U.S. location — marked a geographic expansion beyond the company's North Dakota roots. SEC capex filings illustrate the underlying trajectory in quantitative terms: quarterly capital expenditures that registered at $20,000 in fiscal year 2021 reached $75.7 million by the first quarter of fiscal year 2024, a more than thousand-fold increase over roughly three years, and that figure predates the current multi-site acceleration.

Against that capex ramp, Applied Digital's disclosed revenue remains modest relative to the scale of commitments in play: $144.2 million for fiscal year 2025, implying that the bulk of economics from its marquee leases are still moving through the construction pipeline rather than the income statement. The two new bond tranches carry coupons of 7.000% and 6.75%, translating to roughly $111 million in annual interest on the $1.59 billion tranche alone — a fixed charge the company will need contracted lease revenues to service once campuses reach commercial operation. Analysts cited by various outlets have characterized the stock as meaningfully undervalued relative to the net present value of contracted cash flows, with one recent estimate placing the discount at 11.8% following the $5.2 billion lease disclosure; such discounted cash flow assessments, however, carry inherent assumptions about delivery timelines and tenant credit quality that are difficult to independently verify.

The opportunity case for Applied Digital rests on three interlocking pillars: a growing contracted revenue backlog that, if the cited figures are accurate, provides multi-year cash flow visibility uncommon among companies at this stage; an emerging power strategy anchored in direct utility agreements rather than speculative grid access; and a tiered financing architecture that, by ring-fencing project vehicles, could theoretically limit cross-collateral contagion if any single campus underperforms. The risks are equally structural. The company is executing simultaneous large-scale construction across multiple states, each project dependent on power delivery timelines over which it has limited control. Customer concentration is a material concern: CoreWeave — itself a leveraged, pre-profitability operator — represents a substantial share of the contracted backlog, and its own financial durability constitutes a second-order risk that Applied Digital cannot fully hedge away. Debt service on the new notes requires campuses to reach commercial operation on schedule, and any construction slippage or regulatory obstacle to power interconnection could tighten liquidity meaningfully. Three signals merit close attention in coming quarters: the pace at which Montana-Dakota Utilities and other utility partners deliver power against announced schedules; whether the identity and credit profile of the unnamed hyperscaler behind the $5.2 billion lease arrangement is formally disclosed, given that it remains unconfirmed in current public filings; and whether Macquarie's up-to-$5 billion commitment progresses from a signed agreement to deployed capital, a milestone that would substantively de-risk the equity financing leg of the entire buildout.