Key insights
- Compass Point raised its price target on Applied Digital (APLD) to $70 following a major data center lease agreement with a U.S.-based hyperscaler. The 15-year deal adds $7.5B in contracted revenue, potentially reaching $18.2B with options. APLD's contracted IT load increases to 1.2GW. This news signals strong growth in the data center and AI infrastructure space, potentially benefiting related tech stocks.
Investing.com - Compass Point raised its price target on Applied Digital (NASDAQ:APLD) to $70 from $45 while maintaining a Buy rating following the company’s announcement of a major data center lease agreement. The stock has surged 542% over the past year and currently trades at $48.02, just shy of its 52-week high of $48.57.
Applied Digital announced Wednesday a 15-year take-or-pay lease for 300MW of critical IT load at Polaris Forge 3, its fourth AI Factory campus, with a U.S.-based high investment-grade hyperscaler. The same customer previously signed Delta Forge 1 in April. According to InvestingPro, analysts anticipate strong sales growth and predict the company will turn profitable this year. For deeper insights, investors can access the comprehensive Pro Research Report, available for APLD and 1,400+ other US equities.
The deal adds approximately $7.5 billion of base-term contracted revenue, or $18.2 billion if all options are exercised. Applied Digital’s baseline contracted revenue now stands at $31 billion across four campuses, while contracted critical IT load increased to 1.2GW from 900MW.
The hyperscaler’s total commitment now reaches 600MW across Delta Forge 1 and Polaris Forge 3. Applied Digital’s tenant roster includes CoreWeave at Polaris Forge 1, Oracle at Polaris Forge 2, and the repeat hyperscaler customer across Delta Forge 1 and Polaris Forge 3.
Approximately 1.67GW of gross utility power is now tied to signed leases. Compass Point analyst Michael Donovan stated the company is "focused on announcing signed deals when complete instead of telegraphing."
In other recent news, Applied Digital announced a significant 15-year lease agreement valued at approximately $7.5 billion with a U.S.-based hyperscaler for its Polaris Forge 3 data center campus. This lease, covering 300 megawatts of critical IT load, could potentially reach a value of $18.2 billion if all renewal options are exercised. Needham responded to this development by raising its price target for Applied Digital to $66 from $51, maintaining a Buy rating. The company also completed a transaction to spin off its cloud business to ChronoScale Corporation, previously known as EKSO Bionics Holdings, Inc. In addition, Applied Digital closed a $300 million senior secured bridge facility led by Goldman Sachs. This facility is intended to fund the development and construction of the company’s third AI data center at Polaris Forge 1 in Ellendale, North Dakota. The company plans to seek further financing to complete the construction. These developments highlight Applied Digital’s strategic moves in expanding its data center operations and financial structuring.
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