Applied Digital signs $5.2 billion lease with mystery hyperscaler

Applied Digital secured its third 15-year lease with the same U.S. investment-grade hyperscaler, a $5.2 billion agreement that brings the data center developer's total contracted portfolio to 1.4 gigawatts across five AI campuses.

"Two years ago, we made a deliberate decision to build a company that scales, not just builds data centers," Wes Cummins, chairman and chief executive officer of Applied Digital, said. "Continued demand from leading hyperscalers across five campuses is strong validation of our model."

The lease covers 210 MW of critical IT load at Delta Forge 2, a purpose-built AI factory campus in an undisclosed southern U.S. state. The take-or-pay structure guarantees Applied Digital $5.2 billion over the initial 15-year term, with potential expansion to $12.7 billion if the hyperscaler exercises all renewal options across 30 years. Initial operations are expected to begin in the first quarter of 2028.

The agreement, announced 18 days after the Polaris Forge 3 lease with the same client, pushes Applied Digital's total contracted base-term lease revenue to $36 billion — or $86 billion if all renewal options are exercised. About 70 percent of that contracted revenue is backed by U.S. investment-grade hyperscalers, giving the company a predictable income stream as it scales from 1.4 GW of critical IT load toward its development pipeline scheduled for 2028 and 2029.

The deal underscores the insatiable demand for AI infrastructure among the largest cloud providers. Applied Digital's franchise model — a standardized approach to design, construction, and operations replicated across campuses — has attracted three long-term commitments from the same hyperscaler since April 2026, including the Delta Forge 1 and Polaris Forge 3 contracts. The company now operates five AI factory campuses with 2.15 GW of grid-connected utility power.

Delta Forge 2 will integrate Applied Digital's proprietary waterless cooling technology and high-power density infrastructure, purpose-built for the compute densities required by large-scale AI training and inference workloads. The company's site selection strategy targets communities where large-scale infrastructure investment creates lasting economic impact, including local employment and an expanded tax base. Construction is underway, with initial operations targeted for the first quarter of 2028.

Shares surged 11 percent in pre-market trading to near $45.69, pushing Applied Digital's market capitalization to about $11.7 billion. The stock has returned 214 percent over the trailing 12 months.

Needham raised its price target to $83 from $66 while maintaining a Buy rating. Compass Point increased its target to $70 from $45, also with a Buy. Citizens kept a Market Outperform rating with a $60 target. The consensus analyst price target stands at $65.83, implying roughly 61 percent upside from current levels. The stock carries a Strong Buy consensus rating, supported by 10 Buy recommendations in the last three months.

The company generated $319 million in revenue over the past 12 months, up 66 percent year over year, though it continues to operate at a loss. Applied Digital recently closed a $350 million revolving credit facility arranged by Goldman Sachs and secured access to an additional $550 million in fresh capital. It also completed the separation of its cloud operations last month, spinning them off as a standalone publicly traded company called ChronoScale (CHRN).

For investors, the question is whether Applied Digital can execute on its ambitious build-out schedule while managing cash consumption. The company holds $2.06 billion in contracted net operating income, providing a visible revenue base. Needham analysts said they expect improved pricing dynamics as Applied Digital broadens its customer portfolio with additional hyperscaler and neo-cloud clients in coming periods. The mystery hyperscaler's identity — and whether it will commit to additional campuses — remains the biggest catalyst for the stock.

This article is for informational purposes only and does not constitute investment advice.