Key Highlights
- APLD shares climbed more than 11% during pre-market hours on Tuesday
- Applied Digital announced its third 15-year agreement with an undisclosed U.S. hyperscaler partner
- The contract encompasses 210 MW of critical IT capacity at the Delta Forge 2 facility, valued at $5.2 billion for the base term
- Combined contracted lease revenue has reached $36 billion, potentially expanding to $86 billion with option exercises
- Needham analysts increased their APLD price target to $83, with Compass Point raising theirs to $70
Applied Digital announced its third significant agreement with the same U.S.-based hyperscaler client, propelling APLD shares upward by more than 11% during Tuesday’s pre-market trading, reaching approximately $45.69.
Applied Digital Corporation, APLD
The agreement covers 210 megawatts of critical IT capacity at Delta Forge 2, representing the company’s fifth AI Factory campus situated in a southern state yet to be publicly disclosed. The base contract carries a $5.2 billion valuation spanning 15 years, with potential expansion to $12.7 billion should renewal clauses be activated throughout a 30-year timeframe.
The facility is projected to commence initial operations during the opening quarter of 2028.
Structured as a take-or-pay contract, the arrangement guarantees Applied Digital will receive no less than $5.2 billion from the client. This framework provides the company with dependable baseline revenue.
This marks the third agreement finalized since April 2026, coming merely 18 days following the Polaris Forge 3 transaction. The hyperscaler partner remains consistent across all three deals, including Delta Forge 1 and PF-3.
CEO Wes Cummins characterized the deal as “strong validation of our model,” emphasizing the company’s strategy of developing data centers with comprehensive in-house design, construction, and operational capabilities spanning all campus locations.
Applied Digital’s total contracted base-term lease revenue now stands at $36 billion, potentially escalating to $86 billion should all available options be exercised. Approximately 70% of this revenue is guaranteed by U.S.-based hyperscalers holding investment-grade credit ratings.
The organization maintains roughly 1.4 gigawatts of critical IT load within its development pipeline targeting 2028 and 2029 deployment, supported by 2.15 gigawatts of grid-connected utility power infrastructure distributed across its five campus facilities.
Wall Street’s Response
Wall Street analysts moved swiftly following the announcement. Needham elevated its price objective from $66 to $83 while maintaining its Buy recommendation. Compass Point boosted its target from $45 to $70, also sustaining a Buy rating. Citizens reaffirmed its Market Outperform stance with a $60 price objective.
The consensus analyst price target currently stands at $65.83, suggesting approximately 61% potential upside from current trading levels. APLD maintains a Strong Buy consensus rating, supported by 10 Buy recommendations issued within the last three months.
The equity has delivered 214% returns over the trailing twelve months and presently commands a market capitalization near $11.7 billion.
Latest Financial Developments
The lease announcement arrives following considerable financial activity for Applied Digital. The enterprise recently completed a $350 million revolving credit agreement coordinated by Goldman Sachs and obtained access to as much as $550 million in additional capital.
Applied Digital also completed the separation of its cloud operations last month, establishing an independent publicly-traded entity named ChronoScale (CHRN).
The company presently maintains $2.06 billion in contracted net operating income. Revenue expanded 66% over the past twelve months to $319 million, although the organization continues operating at a loss with negative cash flow.
Needham analysts indicated expectations for pricing improvements as Applied Digital diversifies its customer base with additional hyperscaler and neo-cloud clients in forthcoming periods.
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