Applied Digital Surges 7% on $7.5B Hyperscaler Deal and Institutional Buying
Applied Digital Corp (APLD) shares jumped 7.27% to $35.06 on Thursday, significantly outperforming a flat S&P 500 as investors rallied behind a massive $7.5 billion long-term lease agreement and new reports of institutional accumulation. The stock's move comes as the company cements its role as a critical infrastructure provider for the ongoing artificial intelligence build-out.
Massive $7.5 Billion Contract Fuels Momentum
Applied Digital is sharply outperforming the broader market today, with its 7.27% gain dwarfing the S&P 500's modest 0.18% rise. The primary catalyst remains the late-month announcement of a 15-year lease agreement with a major U.S.-based hyperscaler. This deal, valued at approximately $7.5 billion, covers 300 megawatts (MW) of capacity at the company’s Delta Forge 1 'AI Factory' campus.
This contract is a transformative milestone for Applied Digital, bringing its total contracted lease revenue to over $23 billion. By securing its second investment-grade hyperscale tenant, the company has significantly de-risked its long-term revenue profile. Analysts note that more than half of the company's total contracted revenue is now backed by investment-grade customers, a factor that is likely driving the current institutional interest.
Institutional Accumulation and Analyst Upgrades
Adding fuel to today's move are reports of institutional buying. Cannon Capital Management recently disclosed a new position in the company, acquiring over 148,000 shares, signaling confidence from the 'smart money' even as the tech sector faces broader volatility. This institutional support follows a string of bullish analyst notes. Needham & Company recently raised its price target for APLD to $48.00 from $41.00, while Roth Capital set an even more aggressive target of $65.00, citing the company's unique position in the high-performance computing (HPC) and AI data center market.
Earnings Beat Provides Fundamental Floor
Today's surge is also a continuation of the positive sentiment following Applied Digital's fiscal third-quarter earnings report earlier this month. The company delivered a massive beat, reporting revenue of $126.6 million against analyst expectations of $78.5 million—a 61% surprise. More importantly, the company posted an adjusted EPS of $0.09, defying forecasts of a $0.14 loss.
The operational highlight of the quarter was the full energization of the Polaris Forge 1 campus in North Dakota. This facility represents one of the few operational 100-MW direct-to-chip liquid-cooled data centers globally, a specialized infrastructure that is in high demand for training next-generation AI models.
Forward Outlook
Looking ahead, Applied Digital is focused on the execution of its Delta Forge 1 campus, which spans over 500 acres and is designed for large-scale AI workloads. Initial operations at the site are expected to commence in mid-2027. While the company continues to navigate high capital expenditure requirements and a negative GAAP net margin due to depreciation and construction costs, the market is currently prioritizing its massive $23 billion backlog and its ability to secure top-tier hyperscale tenants over near-term profitability metrics.
Key Takeaways
- APLD surged 7.27% to $35.06, outperforming the S&P 500 by over 7 percentage points.
- A new 15-year, $7.5 billion lease with a U.S. hyperscaler has pushed total contracted revenue past $23 billion.
- Institutional buying from firms like Cannon Capital and price target hikes to $48-$65 are providing strong technical support.
- The company's specialized liquid-cooled data center infrastructure is seeing accelerating demand from AI developers.