APLD stock jumps as Applied Digital inks $7bn lease deal with CoreWeave

Why Applied Digital’s 250MW CoreWeave Lease Is a Defining Moment for AI Infrastructure

Applied Digital Corporation (NASDAQ: APLD) on Monday announced a landmark 15-year lease agreement with AI hyperscaler CoreWeave, set to generate approximately $7 billion in revenue. The deal, covering 250 megawatts (MW) of critical IT load capacity at Applied Digital’s Ellendale, North Dakota data center campus, positions the company at the heart of the next hyperscale buildout wave driven by artificial intelligence and high-performance computing (HPC) workloads.

This development comes at a time when demand for generative AI and accelerated computing is outpacing traditional data center design, forcing infrastructure providers to retool for low-latency, high-density, GPU-centric operations. The Ellendale campus is Applied Digital’s flagship response to this shift—a purpose-built, scalable site engineered to accommodate up to 1 gigawatt (GW) of compute capacity over time.

How Much Is Applied Digital Earning From CoreWeave—and What’s the Delivery Timeline?

The lease structure includes two phases. The first facility, offering 100 MW, is expected to be operational by Q4 of calendar year 2025. The second phase, comprising a 150 MW build currently under construction, is slated for service by mid-2026. CoreWeave also retains an option for a third facility totaling another 150 MW, with a projected 2027 delivery. If exercised, this would bring the total lease footprint to 400 MW on the Ellendale campus.

Applied Digital estimates total revenue across the term to reach $7 billion—translating to an annualized revenue stream approaching $466 million. Given the scale and fixed-term nature of the leases, analysts see this as a long-term anchor that could materially de-risk Applied Digital’s cash flow while enabling capital recycling into additional AI-ready sites.

Why CoreWeave Chose Ellendale for Hyperscale AI Compute

CoreWeave’s choice of Ellendale underscores the strategic appeal of the location and facility design. Ellendale offers access to low-cost, abundant energy, favorable climate conditions that reduce cooling loads, and speed-to-market capabilities due to modular infrastructure planning. Applied Digital’s CEO Wes Cummins said the leases “solidify Applied Digital’s position as an emerging provider of infrastructure critical to the next generation of artificial intelligence and high-performance computing.”

From CoreWeave’s perspective, the build-to-suit campus offers the agility to scale compute needs without locking into legacy colocation constraints. As enterprise AI workloads shift from experimental deployments to scaled inference and training runs, flexibility in power allocation, rack density, and GPU fleet customization becomes paramount—factors Ellendale is optimized to address.

What Makes Ellendale Different From Traditional Data Centers?

Applied Digital designed the Ellendale campus as a modular, high-density digital infrastructure platform. Unlike legacy data centers that are retrofitted for GPU clusters, Ellendale is engineered from the ground up for high-performance AI workloads. The design integrates CSaaS (Compute Services as a Service) and GPU-as-a-Service architectures, allowing rapid deployment of custom clusters tailored to client models like LLMs or agentic AI pipelines.

The campus has over 1 GW of power currently under load study, meaning it can continue to grow beyond its initial 400 MW capacity. This flexibility is seen as a strategic hedge for future expansion, particularly if additional hyperscalers, federal AI initiatives, or sovereign compute customers come online in the next few years.

How Is the Stock Market Responding to This Deal?

Following the announcement on June 2, 2025, Applied Digital’s stock (NASDAQ: APLD) surged 23.1% in a single trading session, closing at $9.56. The rally reflects strong investor enthusiasm around the company’s ability to secure long-term, high-value clients in the rapidly growing AI infrastructure segment.

Institutional sentiment has also turned decisively bullish. APLD currently has approximately 65.7% institutional ownership. Prominent holders include Vanguard Group, BlackRock, and Hood River Capital. Over the past two years, institutional investors have accumulated over 74 million shares, reflecting confidence in the company’s pivot to AI and HPC infrastructure.

What Are Analysts Saying About Applied Digital’s Future?

Analyst consensus remains firmly in bullish territory, with a “Strong Buy” rating and an average 12-month price target of $10.91. The range spans from $7.00 on the low end to $20.00 on the high end, with many analysts citing Ellendale’s long-term revenue contribution and CoreWeave’s expansion potential as central to their forecasts.

The upside potential is magnified by the optionality embedded in the deal. If CoreWeave exercises its 150 MW expansion option and Applied Digital delivers on its 1 GW scaling plan, annualized lease revenues could exceed $1.2 billion in the coming decade.

How Do the Financials Stack Up Against Sector Peers?

While the deal is a major win, Applied Digital’s financial profile remains a key point of scrutiny. The company has a reported debt load nearing $993.7 million and is in an active cash burn phase as it scales operations. For comparison, Digital Realty and Equinix—sector peers in hyperscale infrastructure—operate with more diversified client portfolios and more mature cash flow dynamics.

However, Applied Digital’s purpose-built focus gives it a leaner deployment model, with an emphasis on power efficiency and tailored compute, which could yield higher margins once fully scaled. Investors are advised to weigh the near-term financial strain against the longer-term monetization potential of these strategic leases.

What Are the Risks?

Forward-looking statements from Applied Digital flag multiple risks: construction delays, financing gaps, client counterparty risk, and broader volatility in AI demand cycles. The company’s dependence on a small number of large clients—CoreWeave being the anchor—also introduces concentration risk.

Mitigation efforts include phased buildouts, modular design to reduce capex strain, and early alignment with high-growth hyperscalers. The company is also believed to be exploring additional anchor tenants across GPU-intensive verticals such as climate simulation, biotech, and financial modeling.

Where Does Applied Digital Fit in the AI Infrastructure Arms Race?

The global AI infrastructure race is heating up. Giants like Microsoft, Google, and Meta are investing heavily in vertically integrated data center capacity. However, as public cloud players prioritize internal demand, second-wave hyperscalers like CoreWeave are filling the gap for open access GPU-as-a-Service platforms.

Applied Digital is becoming a critical enabler of this shift. By offering an alternative to both cloud vendor lock-in and legacy colocation, the company is carving out a niche in the AI infrastructure stack—particularly for emerging AI-native firms that need rapid, flexible deployment of compute resources without building their own real estate.

What’s Next for Applied Digital and CoreWeave?

The next 18–24 months will be pivotal. Applied Digital’s execution timeline—delivering the first 100 MW facility by end-2025 and the second 150 MW by mid-2026—will be closely watched by analysts and clients alike. Additionally, whether CoreWeave exercises its 150 MW expansion option in 2027 will serve as a barometer of satisfaction and future growth prospects.

Beyond Ellendale, Applied Digital is expected to continue expanding its presence in other regions with similarly favorable energy profiles. The company is also believed to be in discussions with additional hyperscale AI and blockchain clients seeking dedicated infrastructure outside of public cloud environments.

Should You Invest in APLD After Its $7 Billion AI Data Center Lease?

In light of its breakthrough lease with CoreWeave, Applied Digital appears well-positioned to capitalize on the exponential rise in AI workloads. The $7 billion contract serves as validation of its model, with early stock gains and institutional flows reinforcing investor confidence.

Yet, with nearly $1 billion in debt and ongoing capex demands, the company must navigate its expansion with precision. Execution discipline, financial management, and timely client onboarding will determine whether Applied Digital cements its place among the next-generation infrastructure leaders—or faces the same capital strain that has challenged prior build-first operators.

Buy/Sell/Hold Recommendation: Hold (With Positive Bias)

Investors already holding APLD may benefit from near-term upside driven by revenue visibility and momentum. New investors should weigh the strategic growth against leverage risks, watching for Q4 2025 operational milestones and any new lease wins.