Key Takeaways
Shares of Applied Digital Corp. (NASDAQ: APLD) surged 11 percent on Thursday, their largest single-day gain since May 11, after the company secured a second major AI data center lease valued at approximately $7.5 billion.
"Polaris Forge 3 is a direct extension of what we've proven works: a disciplined, repeatable AI factory model that delivers large-scale capacity to the world's most demanding compute customers," CEO Wes Cummins said in a statement.
The new 15-year take-or-pay lease is for 300 megawatts of capacity at the company's upcoming Polaris Forge 3 site. This agreement mirrors a previous deal for its Delta Forge 1 campus, bringing total contracted lease revenue to $31 billion and total contracted IT load to over 1 gigawatt. The company's most recent quarterly revenue was $108.55 million, a 139.3% year-over-year increase, though it posted a net loss of $0.36 per share.
The stock closed at $39.52 on Wednesday. The back-to-back deals with the same undisclosed hyperscaler—large-scale cloud providers like Amazon Web Services or Microsoft Azure—confirm Applied Digital's role as a key infrastructure supplier for the AI buildout. With hyperscalers projected to spend $725 billion on capital expenditures in 2026, the company has a large addressable market.
Following the announcement, Needham analyst John Todaro raised his price target on Applied Digital to $66 from $51, maintaining a Buy rating. Todaro highlighted the company's expanding capacity, which now includes a 1.7 gigawatt portfolio and a 1.3 gigawatt development pipeline. Citizens JMP also reiterated a Buy rating with a $60 price target. The consensus among 15 analysts covering the stock is largely positive, with 13 recommending it as a Buy or Strong Buy against one Hold and one Sell.
The new contract significantly de-risks Applied Digital's growth outlook, providing multi-decade revenue visibility. Investors will watch for the operational start of Polaris Forge 3 in August 2027 to see if the company can execute on its expanding backlog.
This article is for informational purposes only and does not constitute investment advice.
