Shares of Applied Digital (APLD) surged as much as 54% on Monday.
The data-center operator announced a lease deal with Nvidia-backed AI firm CoreWeave.
The 15-year agreement is expected to generate $7 billion of revenue for Applied Digital.
The move: Applied Digital Corporation stock surged as much as 54% on Monday to an intraday high of $10.54. It closed 48% higher, at $10.14.
The chart:
Why: Shares of the AI data center operator soared on the announcement of two 15-year lease deals with CoreWeave that will generate $7 billion in revenue for Applied Digital.
Under the terms of the deal, CoreWeave, a cloud services firm that’s been backed by Nvidia, will receive 250 megawatts of data center capacity from an Applied Digital campus in North Dakota, with the option for CoreWeave to access another 150 megawatts.
“We believe these leases solidify Applied Digital’s position as an emerging provider of infrastructure critical to the next generation of artificial intelligence and high-performance computing,” said Wes Cummins, Chairman and CEO of Applied Digital.
What it means: The deal is a massive win for Applied Digital, which is in the process of converting itself into a data center real estate investment trust. Data centers are seeing massive demand from the so-called AI hyperscalers, like Meta and Microsoft, as they pursue their ambitions in the booming space.
A note from Needham, cited by Bloomberg, said that the deal could also pave the way for other enterprise AI customers to turn to Applied Digital for their data center needs. The note also said OpenAI could be the end customer of the lease agreement, given the ChatGPT creator’s $4 billion deal with CoreWeave last month.
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