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DALLAS - Applied Digital Corporation (NASDAQ:APLD), a $1.53 billion market cap firm specializing in digital infrastructure for high-performance computing (HPC) applications, has secured two long-term lease agreements with CoreWeave, an AI Hyperscaler. The company has shown impressive revenue growth of 53.7% over the last twelve months, according to InvestingPro data. These agreements, each spanning roughly 15 years, will see Applied Digital providing 250 megawatts (MW) of critical IT load from its Ellendale, North Dakota data center campus to support CoreWeave’s artificial intelligence (AI) and HPC infrastructure.
The leases are expected to generate approximately $7 billion in revenue for Applied Digital over their term. Additionally, CoreWeave retains the option to expand by another 150 MW at the same location, potentially increasing the campus’s role as a significant AI and HPC hub. While this represents a significant opportunity, InvestingPro analysis indicates the company currently operates with a substantial debt burden of $993.67 million and is rapidly burning through cash. For detailed insights into Applied Digital’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Wes Cummins, Chairman and CEO of Applied Digital, stated that these agreements reinforce the company’s emerging role in infrastructure vital to the next generation of AI and HPC. He highlighted the potential for substantial returns and the ability to meet the growing demand in these sectors.
The Ellendale campus is set to be one of the most significant data center developments in North America, engineered to support high-density computing and designed to scale up to 1 gigawatt over time. The first 100 MW data center for CoreWeave is scheduled to be operational in the fourth quarter of 2025, and a second 150 MW facility is under construction, with completion expected in mid-2026. A third building, also at 150 MW, is in planning and anticipated to be ready by 2027.
Applied Digital’s design of the Ellendale campus emphasizes speed and efficiency in deployment, strategic location, innovative AI design, and access to low-cost energy. The energy-efficient climate is expected to meet rapid capacity demands, positioning both the region and Applied Digital as leaders in the AI data center space.
The company’s approach to data center construction and operation is intended to provide secure, scalable, and sustainable digital hosting, facilitating services like CSaaS and GPU-as-a-Service. With a deep expertise in hyperscale computing and a robust pipeline of available power, Applied Digital aims to accommodate AI Factories and support various compute-intensive workloads.
This news is based on a press release statement, which also contained forward-looking statements subject to risks and uncertainties that could affect the company’s actual results. InvestingPro analysis shows the stock has demonstrated high volatility, with analysts maintaining optimistic sales growth forecasts for the current year despite current profitability challenges. InvestingPro subscribers have access to 15 additional key insights about Applied Digital’s financial position and market performance.
In other recent news, Applied Digital Corp. has announced that it will classify its Cloud Services Business as discontinued operations starting with the fourth quarter of the fiscal year ending May 31, 2025. This decision follows the Board of Directors’ approval of the sale of the Cloud Services Business, marking a strategic shift for the company. Additionally, Applied Digital has provided unaudited pro forma financial statements to give investors insight into the potential impact of this sale. Meanwhile, JMP Securities has maintained a Market Outperform rating for Applied Digital, with a $12.00 price target, reflecting confidence in the company’s future performance. Citizens JMP also assigned a Market Outperform rating with the same price target, highlighting optimism about the company’s strategic transition toward high-performance computing services. Conversely, Craig-Hallum has adjusted its price target for Applied Digital to $10 from $12, following earnings that fell short of expectations due to lower-than-anticipated Cloud Services revenue. Cantor Fitzgerald has significantly lowered its price target from $14 to $7 while maintaining an Overweight rating, pointing out potential in the company’s Ellendale facility. These developments reflect a dynamic period for Applied Digital as it navigates strategic changes and varying analyst perspectives.
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