Applied Digital Corporation (NASDAQ: APLD) announced a 15-year take-or-pay lease with a U.S.-based investment-grade hyperscaler for its Polaris Forge 3 AI campus in May 2026.
The deal adds 300 MW of critical IT load, lifting total contracted lease revenue to $31.00 billion across four AI Factory campuses.
The agreement pushes Applied Digital’s contracted AI data center capacity to 1,200 MW, reflecting the scale of long-term demand the company continues to secure.
Shares surged 23.9% following the announcement, signaling strong investor confidence in the company’s growing hyperscaler relationships and long-duration revenue base.
To own Applied Digital, investors need to believe the company can convert its fast-growing AI data center footprint and long-term leases into durable, cash-generating infrastructure while managing a highly leveraged balance sheet and ongoing losses.
The Polaris Forge 3 deal directly supports the core catalyst of locking in long-duration, hyperscaler-backed revenue, but it also amplifies near-term risk around funding multi-billion dollar buildouts and maintaining liquidity if capital markets or customer plans change.
Before this announcement, Needham had already raised its price target on Applied Digital after meetings with management, citing execution on the 1 GW construction pipeline and a tenant mix shifting toward investment-grade hyperscalers.
The new 300 MW lease appears to extend those same themes, potentially reinforcing both the appeal of long-term contracts and the importance of monitoring balance sheet strain.
Applied Digital’s narrative projects $2.6 billion in revenue and $467.2 million in earnings by 2029, requiring 100.2% yearly revenue growth and a $587.0 million earnings increase from -$119.8 million today.
Those forecasts yield a $52.80 fair value estimate, representing approximately 8% upside to the stock’s price at the time of the report.
The most optimistic analysts were already modeling revenue at approximately $1.6 billion and earnings near $640 million by 2029, meaning the new 300 MW lease could either reinforce their bullish case or prompt a reassessment of customer concentration and financing risk.
Investors watching Applied Digital should weigh the company’s surging contracted backlog against its heavy capital requirements and existing debt load, which remain key variables in the longer-term investment case.
