Applied Digital's stock surges 31% on Q2 earnings, $11 billion lease deal, and rising demand for AI computing power.

Applied Digital (APLD) shares jumped 31% on Thursday, driven by a major cloud provider leasing an additional 150 MW of computing power from the company. This brought the total contract value to $11 billion, the maximum the company can provide from its Ellendale, North Dakota location. Despite somewhat mixed earnings results, the news was welcomed by analysts, with one raising his price target to $16. Big tech companies like Meta and Microsoft are also increasing their AI capex, but long-term concerns about Applied Digital's business model remain.

Applied Digital Corporation (NASDAQ: APLD) saw its shares jump 31% on Thursday, driven by a significant expansion in its long-term lease agreement with AI hyperscaler CoreWeave Inc. (NASDAQ: CRWV). The company announced that CoreWeave exercised a 150-megawatt (MW) lease option, bringing the total contracted capacity to 400 MW and unlocking up to $11 billion in potential revenue over the next 15 years [1].

The news was well-received by analysts, with one raising his price target to $16. Despite somewhat mixed earnings results, the expanded lease agreement was seen as a major boost to the company's future prospects. Applied Digital's Ellendale, North Dakota, data center is designed for high-density computing and has the potential to eventually scale up to 1 gigawatt [1].

The company's fiscal Q4 2025 earnings report, released Wednesday after market close, showed $38 million in revenue, up 41% year over year, and an adjusted EPS loss of $0.03, easily beating analyst expectations [2]. CEO Wes Cummins emphasized acceleration at the company's Polaris Forge 1 campus and reiterated long-term plans to generate $1 billion in annual NOI within 3–5 years, supported by demand from hyperscale cloud customers [2].

Big tech companies like Meta and Microsoft are also increasing their AI capital expenditure (capex), which could drive further demand for Applied Digital's data center services. However, long-term concerns about the company's business model remain, as it faces an uphill battle to gain traction in an extremely competitive environment [2].

References:
[1] https://finance.yahoo.com/news/applied-digital-apld-announced-signing-185304463.html
[2] https://www.nasdaq.com/articles/stock-market-today-applied-digital-soars-31-coreweave-deal-and-earnings-surprise