Applied Digital Corporation (NASDAQ: APLD) is having one of those “welcome to AI infrastructure” weeks: spectacular upside runs, sudden air pockets, and investors aggressively re-pricing what a capital-intensive data-center builder should be worth in late 2025.
On Monday, Dec. 15, 2025, APLD plunged roughly 17.5% in heavy volume, with multiple market commentaries attributing the move to a broader pullback in AI-infrastructure valuations rather than a single, obvious company headline. [1]
But the deeper story—relevant for Dec. 16, 2025 readers—isn’t just “APLD down big.” It’s why this stock is so hypersensitive to sentiment, and how its unusually large backlog of long-term leases collides with the equally large realities of financing, construction timelines, and tenant credit risk.
APLD stock in one sentence: a leveraged bet on “power + tenants + execution”
Applied Digital builds and operates high-performance data centers marketed as “AI factories,” with major projects in North Dakota (Polaris Forge campuses). The company’s bull case is simple: lock up long-duration leases for scarce “AI-ready” capacity, then scale fast enough to turn contracted megawatts into recurring net operating income. [2]
The bear case is also simple (and very 2025): if financing costs rise, if delivery slips, or if tenants look shakier, the equity can get repriced violently—because the model is capital-hungry and still loss-making today. [3]
That tension is exactly what showed up in this week’s tape.
Why Applied Digital stock fell: valuation jitters, dilution overhang, and “AI infra” rotation
Several outlets covering the Dec. 15–16 move converged on the same core explanation: profit-taking and a valuation reset across momentum-heavy AI infrastructure names, with APLD caught in the blast radius. Benzinga noted there wasn’t clear company-specific news driving Monday’s selloff and framed the move as rotation/profit-taking plus investor caution about how quickly Applied Digital is expanding and using debt to fund growth. [4]
MarketBeat highlighted just how “risk-on” the stock has been: the drop came with elevated trading volume (tens of millions of shares) and followed a sharp run earlier in the year—classic conditions for a sharp unwind. [5]
TipRanks added a derivatives angle: options activity picked up, with a higher-than-typical put/call ratio and implied volatility jumping—basically, traders paying up for protection because they expect big swings to continue. [6]
The quieter catalyst: SEC resale registration and “supply overhang” psychology
Another thread worth flagging for Dec. 16 is the market’s sensitivity to potential share supply.
On Dec. 5, 2025, an S-3 registration statement filed with the SEC covered the resale of up to 2.4 million shares (warrant shares). Importantly, the filing states the company will not receive proceeds from those resales—this is not a primary capital raise—but such registrations can still create an “overhang” in investors’ minds (more potential sellers, more potential supply). [7]
In a high-beta name like APLD, “overhang” doesn’t have to be massive to matter. It just has to be narratively convenient during a risk-off day.
The bull case powering APLD: multi-billion-dollar contracted revenue and a rapid buildout
Applied Digital’s supporters point to something real and unusually tangible for an “AI story stock”: contracted, long-term lease revenue tied to specific megawatt deployments.
Polaris Forge 1: CoreWeave and the 400 MW buildout
Applied Digital has announced multiple long-duration lease agreements with CoreWeave that bring Polaris Forge 1’s contracted IT capacity to 400 MW and describe roughly $11 billion of anticipated/contracted lease revenue tied to those arrangements (with timelines stretching through 2026–2027 for later buildings). [8]
On the execution front, Applied Digital also reported construction milestones:
- Oct. 27, 2025: “Ready for Service” for Phase 1 (50 MW) of the first 100 MW building [9]
- Nov. 24, 2025: completion of Phase II (another 50 MW), bringing that first building to a fully energized 100 MW [10]
Those milestones matter because, in data centers, speed-to-power is the product. If you deliver power late, you can blow up everyone’s spreadsheets.
Polaris Forge 2: a $5 billion lease and expansion optionality
In October, Reuters reported Applied Digital signed a ~15-year, $5 billion AI infrastructure lease with a U.S.-based investment-grade hyperscaler for 200 MW at Polaris Forge 2, lifting total leased capacity across its North Dakota campuses to 600 MW. [11]
Applied Digital later described Polaris Forge 2 as having 1 GW expansion potential, and said the hyperscaler tenant holds a right of first refusal for an additional 800 MW at that site. [12]
Taken together, the company has framed its contracted revenue across both campuses at around $16 billion, reinforcing why the stock has attracted “AI picks-and-shovels” investors. [13]
Financing: the rocket fuel (and the reason the market gets nervous)
To build these campuses, Applied Digital has been stacking financing layers—some “asset-level,” some corporate—and that’s where the stock’s volatility gets its teeth.
Macquarie partnership: up to $5 billion preferred equity facility
Macquarie Asset Management disclosed a preferred equity financing partnership of up to $5.0 billion, with an initial investment plan up to $900 million and the right to provide additional capital for the pipeline. [14]
Applied Digital also announced expected additional funding draws totaling $787.5 million (split between Polaris Forge 1 and Polaris Forge 2) as part of that facility. [15]
Senior secured notes: $2.35 billion at 9.250%
In November, the company announced pricing for a $2.35 billion offering of 9.250% senior secured notes due 2030 (priced at 97), with proceeds aimed at funding construction and related expenses at Polaris Forge 1 facilities, repaying certain credit agreement balances, and covering reserves/fees. [16]
Here’s the emotional truth the market trades on: big contracts + big capital needs can look incredible in a bull market and terrifying in a rate-sensitive pullback—sometimes in the same week.
Earnings backdrop: strong revenue growth, but losses persist
Applied Digital’s most-cited recent fundamental catalyst was its fiscal first-quarter 2026 report (released in October), which showed:
- Revenue of about $64.2 million, up roughly 84% year-over-year
- Adjusted loss of $0.03 per share (in line with some expectations)
- Strong demand linked to AI data center services and CoreWeave-related activity [17]
Reuters also reported the company provided a second-quarter revenue outlook range of $75 million to $85 million at that time. [18]
This is an important “translation layer” for APLD: investors aren’t just betting on growth—they’re betting on growth that arrives on time, so the company can eventually scale margins and cash flow enough to justify the capital structure.
APLD stock forecasts and analyst targets: big upside… and big disagreement
If you’re looking for a single, clean “APLD stock forecast,” you won’t find one—because analysts and platforms are working from very different assumptions about timing, margins, and risk.
Here’s what prominent, widely-circulated reads around Dec. 15–16, 2025 show:
- TipRanks (Dec. 16): reported a “Strong Buy” consensus and an average price target around $42.78 (implying substantial upside from the post-drop level cited). [19]
- MarketBeat (Dec. 15): characterized consensus as “Moderate Buy” with an average price target around $26.20, while also listing multiple raised targets (including some up to $40) and at least one sell rating. [20]
- Reuters (Oct. 10, LSEG data referenced): said all brokerages in its sample rated the stock “buy” or higher, with a median price target of $40 at the time. [21]
- Simply Wall St (Dec. 15): published a narrative fair value around $43.70 versus a last close near $22.98, while also warning the stock’s valuation multiples leave little room for execution slips. [22]
Why the spread? Because small changes in assumptions—financing costs, utilization timing, cap rates, tenant credit, even the pace of transformer deliveries—can produce wildly different present values.
The biggest risk investors are suddenly talking about: tenant credit and “neo-cloud” exposure
A Reuters Breakingviews column published earlier in December put a spotlight on a structural issue for the whole AI data-center boom: developers and lenders are counting on tenants staying creditworthy over long leases, and some tenants are newer “neo-cloud” intermediaries rather than mega-cap hyperscalers. [23]
Breakingviews used Applied Digital’s relationship with CoreWeave as an example of how financing math can tighten:
- Long leases can look stable, but tenants may have shorter-duration contracts with their own customers, creating mismatch risk. [24]
- Higher perceived tenant risk can mean higher borrowing costs, which can reduce project returns and make future builds harder to justify. [25]
This matters for APLD stock on Dec. 16, 2025, because the market isn’t only valuing “AI demand.” It’s valuing the financing pipeline that turns demand into energized megawatts.
What to watch next for Applied Digital (APLD) stock
For investors tracking APLD after the Dec. 15–16 volatility, the next catalysts are likely to be operational and financing updates rather than “AI hype” headlines:
Execution milestones at Polaris Forge 1 and schedule clarity for later buildings (including timelines described for the second and third buildings under CoreWeave-related leases). [26]
Polaris Forge 2 construction progress and any expansion/option exercise dynamics around the hyperscaler tenant’s right of first refusal for additional capacity. [27]
Financing developments, including how the Macquarie facility and debt stack evolve as projects move from build phase to “ready for service.” [28]
Any additional SEC filings that increase perceived share supply—or insider selling disclosures that reinforce the “distribution” narrative that often shows up during momentum reversals. [29]
Bottom line for Dec. 16, 2025: APLD is still an AI infrastructure story—just one with real balance-sheet physics
Applied Digital Corporation has managed to do something rare: attach an AI narrative to specific assets, specific megawatts, and specific long-term contracts. [30]
But the stock’s sharp move into Dec. 16 is a reminder that AI infrastructure is not just software—it’s concrete, copper, power purchase agreements, and expensive capital. When the market mood shifts, APLD doesn’t drift. It teleports.
References
1. www.marketbeat.com, 2. ir.applieddigital.com, 3. www.reuters.com, 4. www.benzinga.com, 5. www.marketbeat.com, 6. www.tipranks.com, 7. ir.applieddigital.com, 8. ir.applieddigital.com, 9. ir.applieddigital.com, 10. ir.applieddigital.com, 11. www.reuters.com, 12. ir.applieddigital.com, 13. ir.applieddigital.com, 14. www.macquarie.com, 15. ir.applieddigital.com, 16. ir.applieddigital.com, 17. www.investopedia.com, 18. www.reuters.com, 19. www.tipranks.com, 20. www.marketbeat.com, 21. www.reuters.com, 22. simplywall.st, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. ir.applieddigital.com, 27. ir.applieddigital.com, 28. ir.applieddigital.com, 29. ir.applieddigital.com, 30. ir.applieddigital.com
