Applied Digital (APLD) stock is hot on Wall Street again. The company is now receiving significant attention after securing a 15-year take-or-pay lease with a U.S. hyperscaler for its new Polaris Forge 3 AI campus. The campus is designed to handle 300 megawatts (MW) of critical load backed by 430 MW of grid power. For the company, this translates to $7.5 billion in base contracted revenue and up to $18.2 billion if options related to future expansion and extra power capacity are included. This not only confirms the long-term power demand but also positions Applied Digital as the right company to deliver that capacity.
Wall Street has responded positively to the recent development, with analysts from Needham and Lake Street assigning price targets of $66 and $70, respectively. Needham analysts were particularly impressed by the speed of the deal, together with the fact that the company is already marketing more sites to the same customer. Applied Digital’s short-term execution has been flawless, and if the trend continues, future capacity additions should follow.
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About Applied Digital Stock
Applied Digital builds and operates digital infrastructure for AI and computing companies in North America. Headquarted in Dallas, Texas, the company provides data centers and GPU computing solutions for businesses working in AI, operating through its HPC Hosting Business, Data Center Hosting Business, and Cloud Services Business segments.
APLD stock has delivered a strong performance over the past year, gaining more than 520%. In comparison, the S&P 500 ($SPX) has posted returns of around 29% during the same period. This year alone, the stock is already up 87%, and the momentum doesn’t show any signs of slowing down.
As with other AI stocks, much of the prospects for Applied Digital are already priced in. One way to look at this is that the market is confident the company will be able to execute perfectly on its backlog conversion. Applied Digital currently has a backlog of about $31 billion, which could possibly turn into $73 billion of realized revenue over time as deals progress. While many of its valuation multiples are quite high, the market is treating Applied Digital as a high-growth AI infrastructure play rather than an average IT company.
