• Applied Digital Corporation recently announced it signed a 15-year, 210 MW take-or-pay lease at its new Delta Forge 2 AI Factory campus with a U.S.-based high investment-grade hyperscaler, adding an estimated US$5.20 billion in base-term contracted revenue and expanding its portfolio to five AI campuses totaling 1.40 GW of critical IT load.
• This latest lease, the company’s third long-term agreement with the same hyperscaler and now accounting for part of a US$36.00 billion base-term contracted revenue backlog (around 70% backed by investment-grade tenants), underscores Applied Digital’s role as a key landlord for large-scale AI data center capacity built around proprietary waterless cooling and high-power-density infrastructure.
• Next, we’ll examine how this long-duration hyperscaler lease, and its very large contracted revenue backlog, reshapes Applied Digital’s investment narrative.

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Applied Digital Investment Narrative Recap

To own Applied Digital today, you have to believe that long-dated, hyperscale AI leases can eventually turn a heavily loss-making, debt-funded builder into a durable, cash-generating landlord. The new 15‑year, 210 MW Delta Forge 2 contract strengthens near-term visibility but also amplifies the biggest current risk: execution and balance sheet pressure as the company layers on multi-billion dollar build commitments and financing to match an expanding US$36.00 billion contracted backlog.

Among the recent developments, the new revolving credit facility of up to US$550 million arranged by Goldman Sachs stands out beside the Delta Forge 2 deal. This facility is directly tied to pre and post lease development of AI campuses, so it sits at the heart of the same catalyst investors are watching closely: whether Applied Digital can fund and deliver its massive hyperscale build-out without tipping financial risk too far.

Yet, behind the headline backlog growth, investors should also be aware of rising leverage and concentrated lease exposure that could...

Applied Digital's narrative projects $2.6 billion revenue and $467.2 million earnings by 2029.

Uncover how Applied Digital's forecasts yield a $52.80 fair value, a 26% upside to its current price.

Exploring Other Perspectives

Some of the lowest ranked analysts were already cautious, assuming revenue would reach about US$2.6 billion by 2029 with no profits, so their concerns about heavy debt and full stack hyperscale lease reliance may look very different once this new US$5.20 billion contract is fully reflected in updated forecasts.

Explore 18 other fair value estimates on Applied Digital - why the stock might be worth as much as 69% more than the current price!

Form Your Own Verdict

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Applied Digital research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.
• Our free Applied Digital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Applied Digital's overall financial health at a glance.

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