Applied Digital (APLD) rises 7.8% on $7.5 billion AI campus lease win – What’s changed?

• Earlier this week, Applied Digital announced that it had signed a 15-year take-or-pay lease for its fourth AI Factory campus, Polaris Forge 3, with a US-based investment-grade hyperscaler, securing master contract revenues of approximately USD 7.5 billion to deliver 300 MW of critical IT workloads.
• This single agreement brings Applied Digital’s total contracted lease revenue across its four AI campuses to approximately USD 31 billion and over 1,200 MW of net contracted AI capacity, highlighting how quickly the company’s hyperscale-focused “AI Factory” model is being adopted.
• Here, we explore how this long-term $7.5 billion Polaris Forge 3 lease reshapes Applied Digital’s investment story around future AI infrastructure demands.

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Applied Digital Investment Story Summary

To own Applied Digital, you need to believe that its hyperscale “AI Factory” leasing model can convert large, long-term commitments into sustainable cash flow despite high capital needs and customer concentration. A new $7.5 billion, 15-year Polaris Forge 3 lease would directly strengthen the short-term drive to expand contracted AI capabilities, but it would also amplify the biggest immediate risks around raising capital and executing large-scale ramp-ups without overstretching the balance sheet.

In this context, the recent US$300 million senior secured bridge facility led by Goldman Sachs is significant. That’s because it highlights how heavily Applied Digital is relying on debt financing to bring Polaris Forge 1 and Polaris Forge 3 online. Combined with hyperscaler lease expansions at Delta Forge 1 and Polaris Forge 2, this strengthens the growth story while further sharpening questions about leverage, future refinancing needs, and potential dilution if more capital is needed.

But behind the headline backlog, investors should also pay attention to how debt and funding needs could grow…

Read the full story on Applied Digital (it’s free!)

The Applied Digital story projects revenue of $2.6 billion and revenue of $467.2 million by 2029. This would require annual revenue growth of 100.2% and an increase in revenue of $587 million from the current -$119.8 million.

Find out how Applied Digital’s projections resulted in a fair value of $52.80, which is 15% higher than the current price.

explore other perspectives

Some of the lowest-ranked analysts are already cautious, assuming sales of about $1.1 billion and profits of just $86.6 million by 2029, but this mega deal could allay or exacerbate concerns about high debt and refinancing risks, depending on how you view the tradeoffs between faster growth and potentially higher dilution and interest costs.

Check out the other 24 fair value estimates at Applied Digital – Find out why the stock is worth 33% more than its current price.

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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