Applied Digital Stock Surges on Up to $5B Investment by Macquarie

Applied Digital Corporation (Nasdaq: APLD) shares jumped in intraday trading Tuesday after announcing that Macquarie Asset Management (MAM) will invest up to $5 billion in its high-performance computing (HPC) data centers. The investment, which includes a $900 million commitment to the Ellendale HPC Campus and the right to invest an additional $4.1 billion across future HPC data center projects, has significantly boosted the company's stock price.

The deal, which is expected to close upon the execution of a 100 MW hyperscaler lease at the Ellendale HPC Campus, will provide Applied Digital with the capital needed to complete the buildout of the 400 MW Ellendale HPC Campus, repay the existing bridge debt of approximately $180 million, and recover over an estimated $300 million of its equity investment in the Ellendale HPC Campus. The investment proceeds, combined with future project financing, will also fund platform G&A and pay transaction expenses.

Macquarie Asset Management will take a 15% equity stake in Applied Digital's HPC business, with the AI company retaining the remaining 85% ownership. The preferred equity will accrue a 12.75% annual dividend, paid in kind or in cash, which will increase by 87.5 basis points on the fifth and sixth anniversaries of the closing, if still outstanding. The preferred equity carries a minimum 1.80x multiple of invested capital liquidation preference, inclusive of the value of the common equity.

The investment by Macquarie Asset Management is a significant vote of confidence in Applied Digital's HPC business and its growth prospects. The deal provides the company with the capital needed to expand its HPC data center footprint and strengthen its market position in the rapidly growing AI infrastructure market. With an estimated 2 GW deployment capability, Applied Digital is positioning itself to become a major player alongside established data center REITs.



The strategic partnership with Macquarie Asset Management also brings several benefits to Applied Digital's HPC business, including:

1. Capital injection: Macquarie's investment provides a significant capital injection, enabling Applied Digital to complete the build-out of the 400 MW Ellendale HPC Campus, repay bridge debt, and recover over $300 million of its equity investment.
2. Future funding rights: Macquarie has the right to invest an additional $4.1 billion across Applied Digital's future HPC data center pipeline, allowing the company to develop over 2 GW of HPC data center capacity.
3. Institutional credibility: Macquarie's involvement adds institutional credibility, which can help Applied Digital secure additional hyperscale customers and strengthen its market position.
4. Technical validation: Macquarie's backing validates Applied Digital's technical strategy, which focuses on stranded power access and closed-loop liquid cooling technology, positioning the company uniquely in the HPC/AI infrastructure market.
5. Market timing: The partnership comes at an opportune time, as AI infrastructure demand is surging while suitable power-ready sites are increasingly scarce. This timing can help Applied Digital capitalize on the growing market need for specialized HPC facilities.
6. Competitive advantage: With an estimated 2 GW deployment capability, Applied Digital is positioning itself to become a major player in the AI infrastructure market, alongside established data center REITs. The focus on Tier 3 markets with stranded power assets provides a competitive advantage in the intense competition for power capacity in traditional data center hubs.

In conclusion, the up to $5 billion investment by Macquarie Asset Management is a game-changer for Applied Digital, providing the company with the capital needed to expand its HPC data center footprint and strengthen its market position in the rapidly growing AI infrastructure market. The strategic partnership with Macquarie brings several benefits to Applied Digital's HPC business, including capital injection, future funding rights, institutional credibility, technical validation, market timing, and competitive advantage. With an estimated 2 GW deployment capability, Applied Digital is positioning itself to become a major player in the AI infrastructure market, alongside established data center REITs.