Applied Digital Corporation (NASDAQ: APLD) saw its stock climb 7.8% after announcing a landmark long-term lease agreement at its Delta Forge 2 AI Factory campus with a U.S.-based investment-grade hyperscaler.
The deal covers 210 MW of critical IT load under a 15-year take-or-pay structure, a contract format that locks in revenue regardless of whether the customer uses the full capacity.
The agreement lifts Applied Digital’s total contracted base-term lease revenue to approximately $36.00 billion across five campuses, a figure that underscores the scale of its pivot toward AI infrastructure.
Alongside the lease announcement, the company closed a $1.59 billion senior secured notes offering tied to its Polaris Forge 1 facility, adding significant debt to fund its expanding build-out.
Applied Digital also secured a $350 million revolving credit facility, further reinforcing its reliance on debt markets to finance multi-billion dollar, hyperscaler-backed construction projects.
The company’s shift from crypto-exposed computing toward long-duration AI data center leases is central to its investment case, with management betting that hyperscaler contracts will eventually support more predictable cash flows.
Analyst projections place Applied Digital’s revenue at $2.6 billion and earnings at $467.2 million by 2029, which would require 100.2% yearly revenue growth and an earnings swing of roughly $587 million from a current loss of $119.8 million.
Those growth targets reflect both the enormous opportunity in AI infrastructure and the steep execution challenge the company faces while carrying rising debt levels and customer concentration risk.
The $1.59 billion bond deal and the new revolving credit facility together illustrate how closely Applied Digital’s revenue visibility is tied to balance sheet pressure and refinancing risk over the coming years.
The Delta Forge 2 lease deepens the company’s dependence on a small number of hyperscale customers, which analysts note sharpens near-term risks around execution even as it strengthens the longer-term growth narrative.
Applied Digital’s waterless cooling technology and high-power density infrastructure remain key differentiators as demand for AI data center capacity continues to accelerate across the industry.
More cautious analysts acknowledge that revenue could reach approximately $2.6 billion by 2029 but remain skeptical about profitability, citing heavy debt loads and hyperscale concentration as factors that could weaken long-term cash flow certainty.
One analysis projects a fair value of $52.80 per share for Applied Digital, representing roughly 24% upside to its price at the time of the announcement, though estimates across the market range considerably higher.
