Shares of Applied Digital (NASDAQ: APLD) surged approximately 12% to $36.35 in afternoon trading Thursday following the announcement of a landmark 15-year, $7.5 billion lease agreement with a major U.S. hyperscaler. The deal, disclosed in a filing with the Securities and Exchange Commission, covers 300 megawatts of capacity at the company's Delta Forge 1 data center campus in Alexandria, Louisiana. The identity of the tenant was not disclosed.
Expanding Hyperscale Portfolio
This new agreement brings Applied Digital's total contracted lease revenue to over $23 billion, according to the company's investor materials released Thursday. The deal adds a third hyperscale tenant to its portfolio, with more than half of its contracted revenue now backed by investment-grade tenants. The company operates three AI data center campuses, with Delta Forge 1 being its latest flagship facility.
Applied Digital CEO Wes Cummins emphasized the company's commitment to "delivering operational AI capacity at scale." The Delta Forge 1 site spans over 500 acres and is designed to deliver 430 megawatts of total capacity, with initial operations expected to begin in mid-2027.
Market Context and Industry Dynamics
The deal comes amid an intense race among tech giants—including Amazon, Google, Meta, Microsoft, and Oracle—to secure power, land, and cooling infrastructure for their artificial intelligence operations. However, the industry faces significant hurdles, including grid bottlenecks, turbine shortages, and lengthy interconnection delays that are slowing the deployment of new data centers.
Applied Digital's announcement positions it strongly in a market where established players like Equinix are already capitalizing on AI-driven demand. Equinix, the world's largest data center operator, projected 2026 revenue above expectations in February, citing robust AI-related growth.
Financing and Expansion Plans
In a separate update, Applied Digital outlined plans to raise up to $600 million in new funding. This includes a $300 million senior secured bridge loan for the 150-megawatt Building 3 at its Polaris Forge 1 facility in North Dakota, as well as up to $300 million in revolving credit to support development, working capital, and transaction costs, according to the SEC filing.
The company has already secured contracts for 400 megawatts with CoreWeave at Polaris Forge 1, and an additional 200 megawatts at Polaris Forge 2 with another investment-grade hyperscaler. Earlier this month, Cummins noted that hyperscalers were "as aggressive as we have ever seen them."
Financial Performance and Risks
Applied Digital reported a 139% jump in quarterly revenue to $126.6 million on April 8, but its net loss widened as expenses nearly tripled. A $59.7 million impairment charge related to its cloud business weighed on results, and the company's backlog has yet to translate into consistent earnings.
The company acknowledges several risks in its filings, including potential construction delays, tight capital market conditions, customer concentration, power supply interruptions, and equipment issues that could impact results. The Louisiana revenue stream has yet to materialize, and financing remains pending.
