New York, May 21, 2026, 11:03 EDT
- Applied Digital shares rose about 17% in morning trade after a new 15-year AI data-center lease.
- The deal lifts contracted lease revenue to $31 billion, or $73 billion if renewal options are used.
- Analysts raised price targets, but execution, financing and customer concentration remain the main risks.
Applied Digital shares jumped in Thursday morning trading after the data-center developer signed a $7.5 billion lease for a new AI campus, the latest sign investors are still willing to pay up for companies tied to artificial-intelligence infrastructure.
The stock was recently at $46.42, up $6.90 on the session, after touching $47.46. Volume had reached about 18.7 million shares, while the company’s market value stood near $13.1 billion, according to market data. The move stood out against a softer tape, with SPY and QQQ, exchange-traded funds that track the S&P 500 and Nasdaq-100, lower in morning trade.
The reason it matters now is simple: the deal adds another long-term tenant to a company whose valuation increasingly rests on whether it can turn access to power and land into rent-producing AI campuses. A “hyperscaler” means a large cloud-computing customer such as the biggest internet and cloud companies; Applied did not name the customer.
Applied said late Wednesday that the 15-year “take-or-pay” lease, a contract where the customer pays for agreed capacity whether or not it uses all of it, covers Polaris Forge 3, its fourth AI Factory campus. The site is designed for 300 megawatts of critical IT load, or power used directly by servers and related computing equipment, and about 430 megawatts of grid-connected utility power. Applied Digital Corporation
The company said the contract brings total contracted baseline revenue to $31 billion across four AI campuses, rising to $73 billion if all renewal options are exercised. The new campus, in an unnamed northern state, is expected to start initial operations in August 2027.
Wes Cummins, Applied Digital’s chairman and chief executive, said Polaris Forge 3 follows a “disciplined, repeatable AI Factory model.” He added that “momentum continues to build” as the company markets more than 1.7 gigawatts of grid-connected utility power across existing and newly added sites. Applied Digital Corporation
The lease follows a similar April agreement at Delta Forge 1, also worth about $7.5 billion over 15 years. Reuters reported then that the deal strengthened Applied’s position as a provider of data centers for AI workloads, as Amazon, Google, Meta, Microsoft and Oracle spend heavily on computing capacity and cooling systems for AI models.
Wall Street moved quickly. Citizens raised its price target on Applied Digital to $60 from $40 and kept an Outperform rating, saying the company had “rapidly strengthened its position as an AI infrastructure provider.” StockAnalysis listed fresh target increases from Lake Street to $70 and Needham to $66, both with Buy ratings. TipRanks
The new lease also answers, at least partly, a timing question that had hung over the stock. Needham analyst John Todaro wrote after the April results that demand was strong, but management had pointed to utilities and new counterparties adding to “longer time to lease signing than initially hoped.” Sherwood News
Applied is still a different business from larger data-center landlords such as Equinix and Digital Realty, and from AI cloud firm CoreWeave, which has been tied to Applied through earlier leases. But the trade is similar: investors are rewarding companies that can secure power, fund construction and deliver capacity fast enough for AI customers. CoreWeave rose about 5% Thursday morning, while Digital Realty and Equinix posted smaller gains.
The company’s latest quarterly report gives the bulls some numbers to point at. Applied reported fiscal third-quarter revenue of $126.6 million, up 139% from a year earlier, and adjusted EBITDA of $44.1 million. It also had $2.1 billion in cash, cash equivalents and restricted cash, against $2.7 billion of debt as of Feb. 28.
But the downside case is not hard to sketch. Applied must still build and energize large campuses, secure project financing, manage power and equipment risks, and avoid becoming too dependent on a small number of very large customers. The company’s own risk language cites construction timing, access to capital, customer dependence and power disruptions as factors that could change the outcome.
Funding is part of the story, not a side issue. Earlier this month, Applied closed a $300 million senior secured bridge facility led by Goldman Sachs to fund work at its Polaris Forge 1 campus, and said it expects to seek more financing to complete construction.
For now, investors are treating the new Polaris Forge 3 lease as proof that demand is still there. The next test is less about signing headlines and more about delivery: getting power live, keeping costs in check, and converting multibillion-dollar contracts into steady cash flow.
