Applied Digital Corp (APLD) shares slipped 2.04% to close at $33.55 on Friday, May 3, 2026, as the stock pulled back from its post-deal highs. The decline came after the company announced a massive 15-year, $7.5 billion AI data center lease with a U.S.-based investment-grade hyperscaler on April 23. Trading volume reached approximately 17.04 million shares, well above average, as investors digested the implications of the deal.
Deal Details and Revenue Impact
The lease agreement covers 300 megawatts of critical IT load at Applied Digital's Delta Forge 1 campus, with initial operations expected to begin in mid-2027. This brings the company's total contracted lease revenue to over $23 billion, with more than half coming from investment-grade tenants. CEO Wes Cummins highlighted that the company now counts "two U.S. based investment-grade hyperscalers" in its portfolio, noting on the April earnings call that hyperscalers are "as aggressive as we have ever seen them" in seeking high-performance AI data center space.
Financial Performance and Balance Sheet
Applied Digital's fiscal third-quarter revenue surged 139% year-over-year to $126.6 million, but the company still reported a net loss of $100.9 million, or 36 cents per share. Adjusted EBITDA came in at $44.1 million. The balance sheet shows $2.1 billion in cash, cash equivalents, and restricted cash against $2.7 billion in debt. The company recently raised $2.15 billion through a private offering of senior secured notes to fund construction of 200 megawatts of critical IT load at the Polaris Forge 2 site in Harwood, North Dakota.
Market Context and Analyst Views
The deal comes amid a broader AI infrastructure spending boom. Reuters reported that Microsoft, Amazon, Alphabet, and Meta are on track to invest over $600 billion in data centers and AI infrastructure this year, benefiting companies like Applied Digital. Needham raised its price target on the stock to $48 from $41, maintaining a "buy" rating, though it cautioned about negative earnings per share and stock volatility.
Execution Risks and Competition
Despite the positive outlook, investors remain cautious about buildout costs, debt load, and management's ability to deliver. The company has flagged potential risks including delays in data center construction, power or equipment issues, financing terms, and tenant commitments. Applied Digital faces increasing competition from firms like CoreWeave, Nebius, and IREN, all vying for capital, GPUs, and cloud clients. As a builder-landlord model, the company's payoff depends on successful project execution, with significant upfront costs and credit risks.
The stock's volatility reflects these uncertainties, but the long-term lease revenue potential keeps analysts and investors watching closely as AI infrastructure spending continues to accelerate.
