Key Highlights
- Shares of Applied Digital climbed more than 11% during pre-market hours on Tuesday
- The firm announced its third 15-year agreement with an undisclosed American hyperscaler
- The agreement 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 all option exercises
- Analysts at Needham boosted their price objective on APLD to $83, while Compass Point increased theirs to $70
Applied Digital announced its third significant agreement with an unnamed American hyperscaler, propelling APLD shares upward by over 11% during Tuesday’s pre-market trading, hovering near $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 location in an undisclosed southern region. The base contract is valued at $5.2 billion across a 15-year span, with potential escalation to $12.7 billion should renewal clauses be activated over a 30-year timeframe.
The Delta Forge 2 facility is projected to commence initial operations during Q1 2028.
Structured as a take-or-pay arrangement, the agreement ensures the client commits to the minimum $5.2 billion payment obligation. This framework provides Applied Digital with guaranteed baseline revenue streams.
This marks the third agreement executed since April 2026, coming merely 18 days following the Polaris Forge 3 announcement. The hyperscaler partner remains consistent across all three deals, including Delta Forge 1 and PF-3.
According to CEO Wes Cummins, this represents “strong validation of our model,” highlighting the company’s strategy of developing data centers with proprietary design, construction, and operational capabilities deployed across all campus locations.
Applied Digital’s aggregate contracted base-term lease revenue now totals $36 billion, potentially reaching $86 billion with full option execution. Approximately 70% of this contracted revenue stream originates from investment-grade hyperscalers based in the United States.
The organization maintains roughly 1.4 gigawatts of critical IT capacity within its development pipeline scheduled for 2028 and 2029, supported by 2.15 gigawatts of grid-connected utility power infrastructure spanning its five campus locations.
Wall Street Analyst Coverage
Wall Street analysts moved swiftly following the announcement. Needham elevated its price objective from $66 to $83 while maintaining its Buy recommendation. Compass Point increased its target from $45 to $70, also retaining a Buy rating. Citizens reaffirmed its Market Outperform stance with a $60 price target.
The consensus analyst price objective 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 a 214% return over the trailing twelve months and presently commands a market capitalization of approximately $11.7 billion.
Latest Financing Developments
This lease announcement arrives after a period of significant capital activity for Applied Digital. The organization finalized a $350 million revolving credit arrangement led by Goldman Sachs and obtained access to as much as $550 million in fresh capital in recent periods.
Applied Digital completed the separation of its cloud operations last month, establishing ChronoScale (CHRN) as a standalone publicly traded entity.
The company currently reports $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 expands its customer base to include additional hyperscaler and neo-cloud clients in coming periods.
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