Applied Digital (APLD) shares surged more than 10% on Tuesday after the company announced a major 15-year lease agreement with an unnamed U.S.-based investment-grade hyperscaler for 210 megawatts of capacity at its new Delta Forge 2 AI campus. The deal is expected to generate at least $5.2 billion in contracted revenue, with extension options potentially pushing the total value to $12.7 billion over 30 years.
The announcement underscores sustained demand for AI infrastructure, even amid recent volatility in technology stocks. Applied Digital has positioned itself as a key provider of large-scale data center capacity, with total contracted lease revenue now reaching $36 billion, or roughly $86 billion if all renewal options are exercised. About 70% of that revenue is tied to U.S. investment-grade hyperscaler customers.
New Lease Expands AI Infrastructure Footprint
Delta Forge 2 will be located in a Southern U.S. state, with operations expected to begin in 2028. The hyperscaler involved is already a customer of Applied Digital, having previously signed leases at two other company facilities. This latest deal adds to a growing portfolio that includes one AI factory under construction in North Dakota, another partially operational facility in the same state, and Delta Forge 1, a separate campus in the South.
The company now has nearly $2.1 billion in contracted net operating income (NOI) and continues to market approximately 1.4 gigawatts of data center capacity, providing substantial room for future expansion. This pipeline has attracted strong interest from Wall Street, as investors increasingly bet on the long-term growth of AI infrastructure.
Analysts Grow More Bullish on Growth Outlook
The lease announcement prompted several brokerages to reiterate positive views and raise valuation targets. Needham analyst John Todaro maintained a Buy rating and increased his price target to $83 from $66, noting he was encouraged by the pace of new customer signings. Compass Point reiterated a Buy recommendation with a $70 target, while Citizens maintained its Market Outperform rating and a $60 target, highlighting that this marks the third long-term contract signed with the same customer.
Lake Street raised its target price to $90 from $70, citing the value created by the new lease and improving prospects for future agreements. According to Lake Street, Applied Digital's continued marketing of 1.4 GW of capacity offers significant upside potential.
AI Demand Continues to Support Stock Performance
Applied Digital shares have risen roughly 60% this year and more than tripled over the past 12 months, outperforming many peers. The stock has continued to gain despite headwinds, including Nvidia's decision to exit its stake in the company. Tuesday's rally suggests investors remain focused on the longer-term demand outlook for AI infrastructure, where hyperscalers continue to commit billions of dollars to secure computing capacity.
According to FactSet data, all 13 analysts covering the stock currently maintain Buy ratings, reflecting optimism that Applied Digital can continue converting its expanding power portfolio into long-term revenue-generating contracts. For context, similar AI infrastructure plays like Corning have also seen strong demand from hyperscalers, while Duolingo and MicroStrategy have shown that tech and AI-related stocks remain volatile but resilient.
This article is for informational purposes only and does not constitute financial advice.
