Applied Digital just signed one of its biggest contracts ever, but the stock still dropped. Shares fell 5.7% after the company announced a 15-year lease with an unnamed U.S. investment-grade hyperscaler for 210 megawatts at a new AI campus, which is set to start operating in 2028. A widespread tech stock selloff on Tuesday overshadowed what would normally be a very positive development. Here’s what’s in the deal and why analysts are still optimistic about the stock.
The customer, who remains unnamed, is a top-tier U.S. hyperscaler and already leases space at two other Applied Digital sites. This new deal guarantees $5.2 billion over 15 years, with renewal options that could bring the total to $12.7 billion over 30 years. Applied Digital did not reveal the customer’s identity or the exact location of the new facility, called Delta Forge 2, but said it will be in a southern U.S. state, separate from the Louisiana Delta Forge 1 campus.
Right now, the company is building one AI factory in North Dakota and has another one there that is partly up and running, along with the Delta Forge 1 campus in central Louisiana. After Tuesday’s announcement, Applied Digital has about $2.1 billion in contracted net operating income lined up.
Needham kept its Buy rating and raised its price target from $66 to $83, saying it was impressed by how quickly Applied Digital is adding new capacity across its power portfolio. The analyst is confident the company can keep finding new sites and signing leases to grow its pipeline even more.
All 13 analysts tracked by FactSet rate Applied Digital as a Buy. The stock is up 67% so far this year and has more than tripled over the past 12 months through Monday’s close, even after Nvidia sold its stake earlier this year.
