Applied Digital's 7.45% Plunge Hits 136th-Largest Volume Amid AI Push and Debt Deals

Market Snapshot

On November 20, 2025, Applied Digital (APLD) closed with a 7.45% decline, marking a sharp reversal from earlier gains. Despite a 36.9% surge in trading volume to $890 million—the 136th highest in the market—the stock’s performance reflected heightened volatility. This follows a week of significant swings, with shares up over 200% year-to-date but down 20–25% intraday last week amid mixed reactions to its capital-raising efforts. The drop contrasts with earlier pre-market gains of 10–11% on the same day, driven by optimism around its AI infrastructure strategy and partnerships.

Key Drivers

Applied Digital’s stock movement on November 20 was shaped by a confluence of strategic announcements and financing developments. The company’s partnership with Babcock & Wilcox (B&W) to build a 300-megawatt natural gas-fired power plant for its $1.5 billion AI Factory project, slated to begin operations in 2028, underscored its push to secure reliable energy infrastructure. CEO Wes Cummins emphasized the efficiency and speed of B&W’s boiler and steam turbine technology, positioning the deal as a competitive advantage in the race to meet AI data center demand. Analysts at Northland Securities reaffirmed a Buy rating with a $40 price target on November 13, highlighting the company’s potential in the AI and high-performance computing (HPC) sectors.

Simultaneously, Applied Digital announced a $2.35 billion senior secured notes offering with a 9.25% coupon, set to close on November 20, and a $787.5 million draw from its $5 billion preferred equity facility with Macquarie Asset Management. These moves, while enabling the construction of two North Dakota data centers (ELN-02 and ELN-03) and refinancing existing debt, introduced substantial leverage and equity dilution risks. The notes, priced at 97% of face value, reflect lender demand for a risk premium due to the company’s reliance on long-term hyperscaler contracts and unproven execution capabilities. The equity draw, tied to Polaris Forge 1 and 2 projects, further raised concerns about capital efficiency and shareholder dilution.

The stock’s intraday volatility also reflected market skepticism about the scale of Applied Digital’s ambitions. While the company’s Polaris Forge campuses—particularly the 400-MW Ellendale and 280-MW Harwood sites—position it as a key player in AI-ready infrastructure, risks loom large. These include execution delays on multi-billion-dollar projects, customer concentration with CoreWeave and an unnamed U.S. investment-grade hyperscaler, and regulatory scrutiny of natural gas-powered data centers. S&P Global’s recent ‘B+’ credit rating with a positive outlook highlighted both the potential for cash flow growth and the fragility of its business model if demand for AI infrastructure slows or financing conditions tighten.

Despite these challenges, the day’s rally suggested renewed investor confidence. The B&W partnership alleviated concerns about power availability, a critical bottleneck for AI factories, while the Macquarie facility provided long-term capital from a reputable infrastructure investor. The notes offering, though costly, aligned with long-term leases at Ellendale, offering some assurance of revenue stability. However, the stock’s 7.45% closing drop indicated lingering caution, as traders balanced optimism about growth with wariness of overleveraging.

Looking ahead, key milestones will test Applied Digital’s execution. The completion of Polaris Forge 1’s 50-MW capacity for CoreWeave, progress on Harwood’s 280-MW campus, and the successful closing of the $2.35 billion notes will be critical. Regulatory and community responses in North Dakota, where environmental and land-use concerns could delay projects, also remain pivotal. For now, the company’s aggressive capital deployment and strategic partnerships have positioned it at the forefront of the AI infrastructure boom—but the path to profitability remains fraught with execution, financial, and macroeconomic risks.