Applied Digital said on Wednesday that it signed a $5 billion infrastructure lease agreement with a U.S. hyperscaler.
Shares of the data center company dropped more than 7% following the announcement, continuing a recent slumped that’s sent the stock down over 20% in the past week. The stock has still almost quadrupled this year.
The lease announced on Wednesday is for about 15 years and will deliver 200 megawatts of capacity at the company’s Polaris Forge 2 campus in North Dakota. It brings the company’s total leased capacity to 600 megawatts at its two Polaris Forge campuses.
Across the tech industry, the major cloud providers and other internet giants are rapidly investing in artificial intelligence infrastructure and announcing plans for massive new data centers to handle an expected surge in demand. Applied Digital didn’t name its partner for the latest agreement, just disclosing that it’s an “investment grade hyperscaler.”
In an interview with CNBC’s “Squawk on the Street,” CEO Wes Cummins said the five U.S. hyperscalers are Microsoft, Meta, Oracle, Amazon and Google, “so that’s really who we’re targeting.” He said the tenant for the first lease was CoreWeave.
“We started down this path a couple years ago and we stubbed our toe a few times, but I think we’ve really dialed in the process of the ability to build at scale,” Cummins said, adding that the company has a 4 gigawatt “active pipeline.”
In June, Applied Digital announced two long-term lease agreements with CoreWeave for 250 megawatts of capacity. The company said it expects $7 billion in rental revenue over 15 years, and the shares soared 48% on that news.
Applied Digital also secured $5 billion in infrastructure funding from Macquarie Asset Management earlier this month.
“We believe Polaris Forge 2 builds on that momentum, reflecting the strength of our partnerships and the speed at which we’re reshaping the AI infrastructure landscape,” Cummins said in Wednesday’s release.
