• Applied Digital signed a 15-year $7.5 billion data center lease with a U.S.-based hyperscaler customer.
• The lease brings its total contracted lease revenue to over $23 billion.
• More than 50% of total contracted revenue is now backed by investment-grade customers, the company said.

Shares of Applied Digital (APLD) hit their highest level in over two months on Thursday after the data center operator struck a 15-year, $7.5 billion lease with an undisclosed U.S.-based hyperscaler tenant at its Delta Forge 1 artificial intelligence data center campus.

The lease will cover 300 megawatts of critical IT load and expand the company's total contracted lease revenue to over $23 billion. 

The mystery tenant is Applied’s second investment-grade hyperscaler customer and its third hyperscaler overall. The firm also noted that over half of the total contracted revenue is now backed by investment-grade customers.

Chief Executive Officer Wes Cummins stated the agreement marks “an important step in the continued diversification of our customer base and strengthening the overall quality and visibility of our contracted revenue.”

The Delta Forge 1 campus, which is expected to be operational by mid 2027, will have a compute capacity of 430 MW once online. 

Additionally, the company said it entered into agreements to borrow up to $600 million to continue development of its Polaris Forge 1 data center campus, and to kick off pre-lease and post-lease development activities, among other things.

Importance Of Data Centers

The significant lease agreement comes as U.S. hyperscalers such as Meta (META), Alphabet Inc.’s (GOOG, GOOGL) Google, Amazon (AMZN), and Microsoft (MSFT) are investing hundreds of billions of dollars to build out their AI data center infrastructure and maintain their lead in the lucrative technology sector, due to increasing demand for AI computing and workloads.

The global data center market size is expected to grow to $517.2 billion by 2030, with the United States continuing to dominate the sector, according to a report published by Allied Market Research on Tuesday.

A Pew Research analysis from earlier this month noted that the U.S. has more than 3,000 operational data centers, and more than 1,500 new data centers are in various stages of development nationwide.

How Did Retail Traders React?

On Stocktwits, retail sentiment about the stock turned ‘ bullish’ from ‘neutral’, while messaging volumes turned ‘high’ from ‘normal’ over the last 24 hours.

One user on the platform noted that the stock’s current price is still a good entry point and expects it to double by the end of the year.

Some bullish users also flagged the disconnect between its market cap and its contracted revenue.

APLD stock has risen nearly 50% so far this year and has increased more than ninefold over the past 12 months, outperforming the benchmark S&P 500 index.

Nearly 26 million shares changed hands before midday on the NASDAQ, exceeding the three-month average trading volume of 23.2 million.

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