Applied Digital Expands AI Factory Footprint with Major Lease Agreement

Applied Digital Inc. (NASDAQ: APLD), a leading player in the high-performance data center sector, has announced a significant new lease agreement that marks a pivotal expansion of its AI Factory franchise model. The company has secured a 210 megawatt (MW) lease at Delta Forge 2, a purpose-built AI Factory campus located in a new southern state, solidifying its presence in the rapidly growing field of artificial intelligence (AI) and cloud computing.

The new lease is structured as a long-term, 15-year take-or-pay agreement with options for renewal. This financial arrangement is projected to bring in approximately $5.2 billion in base-term contracted revenue, which could escalate to around $12.7 billion if all renewal options are exercised over the course of a total 30-year term. This agreement is with a U.S.-based high investment-grade hyperscaler, marking Applied Digital's fifth AI Factory campus to date.

This agreement significantly enhances Applied Digital's financial outlook. The company's overall contracted portfolio now spans five AI Factory campuses, comprising a total of 1.4 gigawatts (GW) of critical IT load and approximately 2.15 GW of grid-connected utility power. Altogether, these campuses represent a staggering $36 billion in total contracted base-term lease revenue, which could rise to an impressive $86 billion if all renewal options are exercised.

Wes Cummins, Chairman and CEO of Applied Digital, emphasized the company's strategic vision during the announcement. "Two years ago, we made a deliberate decision to build a company that scales, not just builds data centers," he stated. The franchise model allows for a replicable core team of design, construction, and operations professionals across all campuses, thus ensuring consistent quality and performance.

The latest agreement is particularly significant as it marks Applied Digital’s third long-term lease with the same hyperscaler, indicating strong and growing demand from leading players in the industry. Approximately 70% of the company's contracted revenue is now backed by U.S.-based investment-grade hyperscalers, providing a solid foundation for future growth.

Applied Digital is not just focused on financial metrics; the company places a strong emphasis on the socio-economic impact of its operations. The site's selection strategy prioritizes communities where large-scale, long-term infrastructure investments can create meaningful economic benefits. Cummins elaborated on this commitment, stating, "We look for communities where this kind of investment genuinely matters — where the jobs, the tax base, and the long-term economic activity have real impact."

The Delta Forge 2 campus is expected to generate substantial local employment and construction activity. Furthermore, it will incorporate Applied Digital’s proprietary waterless cooling technology and high-power density infrastructure, designed specifically for the compute demands associated with large-scale AI training and inference workloads. Initial operations are anticipated to commence in Q1 2028.

The lease agreement at Delta Forge 2 represents a significant advancement in Applied Digital's growth strategy, reinforcing its position as a leader in the AI data center market. With its innovative franchise model, commitment to community impact, and strong financial backing from hyperscalers, Applied Digital is poised to continue its trajectory of expansion and success in the coming years. The company's focus on sustainable and efficient data center solutions aligns well with the increasing demand for AI and cloud computing capabilities, setting the stage for a promising future.

As the landscape of high-performance computing continues to evolve, Applied Digital's strategic decisions and operational excellence will be critical in navigating the challenges and opportunities that lie ahead.