Riot Platforms (NASDAQ:RIOT) saw its shares climb 4.33% on Tuesday, closing at $20.24, after the company unveiled a landmark data center lease agreement. The stock had surged as much as 16% in pre-market trading before settling, reflecting investor enthusiasm tempered by the long timeline to full revenue realization.
The 20-year contract, signed for Riot's Rockdale, Texas facility, secures 191 megawatts (MW) of capacity for a tenant described as a "prominent frontier AI laboratory." Reports from Barron's and Investopedia, citing sources familiar with the matter, identify the customer as Anthropic, though Riot has not officially confirmed the name. The deal is expected to generate $9.1 billion in base revenue through June 2048, a figure that dwarfs Riot's current market capitalization of approximately $7.65 billion.
On an annualized basis, the contract implies average revenue of $455 million per year, or roughly $2.38 million per megawatt-year. Riot projects average annual net operating income (NOI) between $365 million and $411 million, representing 80% to 90% of base revenue. However, the first phase of delivery is not scheduled until December 2027, with full 191 MW deployment expected by June 2028, meaning the bulk of the cash flow remains nearly two years away.
This new agreement marks a significant upgrade from Riot's earlier partnership with Advanced Micro Devices (NASDAQ:AMD). The original AMD lease, announced in January, covered 25 MW over 10 years for $311 million in base revenue, with AMD since expanding to 50 MW. The new AI lease delivers approximately 91% more base revenue per megawatt-year compared to the AMD deal, underscoring the premium that frontier AI workloads command.
Chief Executive Jason Les called the lease "a defining moment in our evolution into a leading developer of large-scale data centers," citing the company's track record of on-time and on-budget delivery for AMD's initial 25 MW in the second quarter. The company's focus is now shifting from backlog to execution, with the Rockdale facility's total capacity of 700 MW providing ample room for future growth.
Riot's second-quarter results, released alongside the lease announcement, showed mixed performance. Total revenue rose 14% year-over-year to $174.2 million, but data-center revenue fell 30.1% sequentially to $23.2 million, as fit-out services declined. Operating lease revenue jumped 444% to $4.9 million, though the company still reported a net loss of $237.2 million, an improvement from the $500.5 million loss in the first quarter. Bitcoin production increased 7.7% to 1,587 BTC, but the cost to mine each bitcoin rose 11.8% to $49,912, excluding depreciation.
Investor sentiment remains cautiously optimistic. Trading volume reached 76.25 million shares, more than four times the recent average, indicating heightened interest. Wall Street analysts are largely bullish, with 13 of 14 ratings recommending "buy" and a consensus price target of $34.43, implying a 70.1% upside from Tuesday's close. Price targets range from $25 to $42, with recent affirmations from Northland Securities, ATB Cormark, Bernstein, Piper Sandler, and BTIG.
Despite the enthusiasm, risks remain. Riot must fund and complete the project before realizing full lease income, and potential setbacks or budget overruns could reduce returns. The company's cash flow and balance sheet remain sensitive to bitcoin price volatility and mining economics. The $9.1 billion figure, while impressive, is a long-term projection, not realized profit. The next critical milestone is December 2027, when Riot must deliver the first 96 MW and transition that capacity to recurring rental income.
