Key points
- Applied Digital shares rose 8.83% after announcing a 15-year, 210-megawatt data center lease with a prominent U.S. hyperscaler, representing $5.2 billion in base lease payments.
- With renewal options, the agreement could extend for 30 years and generate up to $12.7 billion in gross rental income.
- This marks the company’s third major contract with the same Hyperscaler customer, pushing Applied Digital’s total contracted backlog to approximately $36 billion.
- Fiscal 2026 revenues are expected to rise approximately 96% from the previous year, to $422 million.
- Over the past 12 months, the stock has risen 282%, significantly outpacing Nvidia’s gain of 44% over the same time frame.
Applied Digital (APLD) saw a strong rally on June 15, rising 8.83% after revealing a large long-term data center lease with a major US-based company. Shares traded near $46.38 and touched an intraday high of $46.98.
The newly signed agreement provides 210 MW of cloud infrastructure capacity over 15 years, with guaranteed base payments totaling $5.2 billion. If the client activates all extension terms, the partnership could extend to three decades and produce $12.7 billion in cumulative revenue.
This represents Applied digital The third major rental arrangement with this particular super metric. The company is now committed to building five separate AI infrastructure parks across its development portfolio.
In total, Applied Digital’s backlog of contracted rents now stands at approximately $36 billion under baseline assumptions. Taking full advantage of the renewal option across all existing agreements, this number could rise to $86 billion.
The stock’s upward movement wasn’t just attributable to contract news. The broader rally in the technology sector, driven by easing geopolitical concerns, provided additional impetus. Several Wall Street analysts also upgraded their price targets in response to the announcement.
Applied Digital works by creating specialized, AI-focused data centers for high-volume enterprises and new clouds, thereby generating recurring rental income through facility management. Although this approach is capital intensive, it creates long and predictable revenue channels once agreements are implemented.
Financial performance shows tremendous expansion
The recently concluded fiscal year 2026 is estimated to have generated 96% year-over-year revenue growth, totaling approximately $422 million. This expansion trajectory is expected to intensify as the company operates the contracted pipeline.
Wall Street expectations indicate that this momentum will continue during the coming financial periods, supported by the large accumulation of executed contracts.
Right now, the stock requires a valuation of roughly 35 times sales, which is a high measure. However, the size of the pipeline and long contract terms provide some rationale for the premium multiple.
Critical considerations for investors
Applied Digital continues to report GAAP losses and negative cash flow. The organization maintains significant debt obligations, and its long-term viability depends on converting contracted revenues into actual profitability before interest expenses become more burdensome.
Shareholder dilution is another concern as the company finances ongoing campus construction projects.
However, the backlog of contracts contracted with blue-chip clients at scale provides a valuable commodity in this sector: revenue predictability. Long-term leases simplify future cash flow projections and may enable Applied Digital to obtain more favorable financing terms for subsequent development projects.
Over the past 12 months, APLD stock has risen 282%, significantly outpacing Nvidia An increase of 44% during the same period. Year-to-date performance shows an increase of 74.14%.
The company’s current market cap is between about $12.2 billion and $13 billion, depending on daily closing prices.
This latest agreement marks Applied Digital’s third contract with the same Hyperscaler customer and brings the total number of AI infrastructure campus commitments to five.
