Applied Digital Surges on $5 Billion AI Data Center Deal
Shares jump after the company secures a 15-year, 200 MW lease with a major U.S. hyperscaler, signaling massive demand for AI infrastructure.
Applied Digital Corporation (NASDAQ: APLD) shares surged nearly 7% in pre-market trading Wednesday after the company announced it had secured a landmark $5 billion lease agreement with an unnamed, investment-grade U.S. hyperscaler.
The deal, which spans approximately 15 years, commits 200 megawatts (MW) of capacity at Applied Digital's Polaris Forge 2 campus in North Dakota, a facility specifically designed to handle the intense power and cooling demands of artificial intelligence and high-performance computing (HPC) workloads.
For a company with a market capitalization of approximately $9.5 billion, the $5 billion contract represents a monumental win that provides a long-term, predictable revenue stream and solidifies its position as a critical infrastructure provider in the booming AI sector. The agreement is the latest in a series of major contracts for Applied Digital, underscoring the voracious appetite for specialized data center capacity from the world's largest technology companies.
“What sets us apart isn't just the size of our pipeline - it's how fast we can deliver,” Wes Cummins, CEO and Chairman of Applied Digital, said in the official announcement. “The real constraint in this industry is execution, and our team continues to prove that large-scale, next-generation data centers can be designed, financed, and brought online faster and more efficiently than anyone thought possible.”
The agreement also includes a significant growth provision, granting the hyperscaler a first right of refusal for an additional 800 MW of capacity at the Polaris Forge 2 campus, which has a total potential capacity of one gigawatt. This option signals a deep strategic partnership and provides a clear path for substantial future expansion.
This new contract brings Applied Digital's total leased capacity across its two North Dakota campuses to 600 MW, contracted by two of the world’s largest hyperscalers. The initial 200 MW from Wednesday's deal is expected to be phased in, with the facility beginning to come online in 2026 and reaching full contracted capacity in 2027, according to GlobeNewswire.
Applied Digital's stock has been highly volatile, reflecting the broader speculative fervor and anxiety surrounding the AI industry. The stock has a 52-week range between $3.31 and $40.20 and a high beta of 6.59, indicating its price moves with significantly more volatility than the overall market. However, Wall Street analysts remain broadly optimistic, with a consensus price target of $40.30, suggesting considerable upside from its current levels.
“Our AI Factories are redefining how and where hyperscale infrastructure gets built,” Cummins added. “We're demonstrating that the next chapter of AI computing can be powered from the heartland - built responsibly, delivered quickly and designed for the Intelligence Era.”
The deal reinforces a critical trend in the technology sector: the infrastructure race to support generative AI is creating a gold rush for companies that can provide the necessary power, cooling, and physical space. As tech giants like Microsoft, Google, and Amazon invest billions in AI models, the demand for specialized data centers like those built by Applied Digital is expected to continue its exponential growth, a trend that investors reacted to positively in early trading as reported by Seeking Alpha.