Applied Digital Announces $160 Million Strategic Financing, Fueling Transformative Accelerated Compute and AI Infrastructure
Rhea-AI Summary
Applied Digital (Nasdaq: APLD) has secured a $160 million strategic financing through a private placement, priced at market, from institutional and accredited investors, including NVIDIA and Related Companies. This investment validates Applied Digital's innovation in the accelerated compute space and will fuel the company's expansion of data center and GPU cloud solutions.
As a Preferred NVIDIA Cloud Partner, Applied Digital is positioned to deliver a proprietary, hyper-efficient platform for advanced HPC and AI workloads. The company is currently building one of the world's largest data centers and developing an additional 300MW of data center capacity. The financing will support these projects and strengthen Applied Digital's position in the market for AI and HPC infrastructure.
Positive
- Secured $160 million in strategic financing from prominent investors including NVIDIA
- Priced at market value of $3.24 per share, indicating investor confidence
- Status as Preferred NVIDIA Cloud Partner
- Building one of the world's largest data centers
- Developing additional 300MW of data center capacity
- Access to immediately available pipeline of stranded power
- Use of advanced technologies like closed-loop liquid cooling
Negative
- Potential dilution for existing shareholders due to issuance of 49,382,720 new shares
Insights
This $160 million strategic financing for Applied Digital is a significant development, demonstrating strong investor confidence in the company's vision and capabilities. The investment, priced at market value, suggests a fair valuation and avoids dilution concerns. The participation of NVIDIA and Related Companies adds credibility and strategic value beyond the capital raised.
The financing will accelerate Applied Digital's expansion in the high-growth AI and HPC infrastructure market. With plans for one of the world's largest data centers and an additional 300MW of capacity, the company is positioning itself as a major player in the space. The focus on liquid-cooled IT environments and access to stranded power could provide a competitive edge in efficiency and scalability.
However, investors should note the dilutive effect of issuing 49,382,720 new shares, which will impact earnings per share. The success of this expansion will depend on Applied Digital's ability to execute its ambitious plans and capitalize on the growing demand for AI and HPC infrastructure.
Applied Digital's strategic financing marks a significant milestone in the AI infrastructure landscape. The company's focus on closed-loop liquid cooling is particularly noteworthy, as it addresses one of the major challenges in high-performance computing: heat management. This technology can significantly improve energy efficiency and allow for higher compute density, important for AI workloads.
The partnership with NVIDIA, a leader in GPU technology, is a strong endorsement of Applied Digital's technical capabilities. As an NVIDIA Cloud Preferred Partner, the company is well-positioned to leverage the latest advancements in GPU technology for AI and HPC applications.
The emphasis on stranded power access is an innovative approach to data center site selection. By tapping into underutilized power sources, Applied Digital can potentially offer more competitive pricing and expand into areas traditionally overlooked by data center operators. This strategy could be a game-changer in the industry, provided they can effectively manage the associated logistical challenges.
The $160 million investment in Applied Digital reflects the booming demand for AI and HPC infrastructure. With the global AI market projected to grow at a CAGR of over
The involvement of Related Companies, a leader in real estate and infrastructure development, suggests potential synergies in site selection and development for future data centers. This could give Applied Digital an edge in scaling its operations rapidly and efficiently.
However, the market for AI infrastructure is becoming increasingly competitive, with major cloud providers and specialized companies vying for dominance. Applied Digital will need to leverage its unique selling points, such as liquid cooling technology and access to stranded power, to differentiate itself and maintain a competitive edge.
Investors should monitor key performance indicators such as customer acquisition, utilization rates of the new infrastructure and the company's ability to meet its ambitious expansion targets. The success of this investment will largely depend on Applied Digital's execution and ability to capitalize on the growing demand for AI and HPC services.
Investment Endorses Applied Digital’s Track Record of Innovation, Accelerating the Creation and Application of its Data Center and GPU Cloud Deployments
DALLAS, Sept. 05, 2024 (GLOBE NEWSWIRE) -- Applied Digital Corporation (Nasdaq: APLD) (“Applied Digital” or the “Company”), a designer, builder, and operator of next-generation digital infrastructure designed for High-Performance Computing (HPC) applications, today announced that it has entered into definitive agreements for a
With this added capital, Applied Digital is further strengthening its financial position to bring its transformative data center and GPU cloud solutions to market at scale. These solutions — supported by the company’s deep bench of hyperscale talent, specialized access to a robust and immediately available pipeline of stranded power, and use of advanced infrastructure technologies such as closed-loop liquid cooling — are poised to deliver a proprietary, purpose-built, hyper-efficient platform for the world’s most advanced HPC and AI workloads. Among these projects are the company’s current build-out of one of the world’s largest data centers and development of an additional 300MW of data center capacity.
Applied Digital, already a Preferred NVIDIA Cloud Partner, remains on the leading edge of data center and cloud computing advancements.
As a leading digital infrastructure developer focused on keeping pace with GPU innovation delivered by leaders like NVIDIA, Applied Digital continues to establish its place as a singular source of significant scale, flexibility, security, and power in a traditionally constrained national market.
“Applied Digital was built on its ability to identify market demands, and we believe our collective philosophy, technical expertise, and long-standing industry experience have brought us to our current place of strength that will carry us and our hyperscale customers securely into the AI and HPC future,” notes Wes Cummins, CEO and Chairman at Applied Digital. “We’re proud of our strong relationship with NVIDIA, and the confidence that both they and Related Companies, along with institutional investors, have placed in us. Our team is eager to bring to market the vital capacity and contiguous, liquid-cooled IT environments that are tailor-made for AI, HPC, and other accelerated compute workloads.”
In the private placement, Applied Digital agreed to issue 49,382,720 shares of its common stock at a price per share of
The securities described above have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The company has agreed to file a resale registration statement with the SEC for purposes of registering the resale of the shares of common stock described above.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor may there be any sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Goldman Sachs & Co. LLC is serving as exclusive placement agent and Lowenstein Sandler LLP is serving as legal adviser to Applied Digital in connection with the private placement.
About Applied Digital
Applied Digital (Nasdaq: APLD) designs, develops, and operates next-generation data centers across North America to provide digital infrastructure solutions to the rapidly growing high-performance computing (HPC) industry. The company also offers large-scale accelerated computing solutions through its AI Cloud offering. Find more information at www.applieddigital.com. Follow us on X (formerly Twitter) at @APLDdigital.
Forward-Looking Statements
This release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives. These statements use words, and variations of words, such as “continue,” “build,” “future,” “increase,” “drive,” “believe,” “look,” “ahead,” “confident,” “deliver,” “outlook,” “expect,” “intend,” “hope,” “remain,” “project” and “predict.” Other examples of forward-looking statements may include, but are not limited to, (i) statements of Company plans and objectives, including advancement in our construction phase of the HPC data center in Ellendale, North Dakota, our evolving business model and a shift in our business strategy towards our HPC data centers, or estimates or predictions of actions by suppliers, (ii) statements of future economic performance, and (iii) statements of assumptions underlying other statements and statements about the Company or its business. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company's expectations and projections. These risks, uncertainties, and other factors include: decline in demand for our products and services; the volatility of the crypto asset industry; the inability to comply with developments and changes in regulation; cash flow and access to capital; and maintenance of third-party relationships. Information in this release is as of the dates and time periods indicated herein, and the Company does not undertake to update any of the information contained in these materials, except as required by law.
Investor Relations Contacts
Matt Glover or Ralf Esper
Gateway Group, Inc.
(949) 574-3860
APLD@gateway-grp.com
Media Contact
Brenlyn Motlagh
Gateway Group, Inc.
(949) 899-3135
APLD@gateway-grp.com
FAQ
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