Applied Digital's $7B CoreWeave Deal Marks Strategic Leap into AI Infrastructure

Key Highlights:

• Secures two 15-year leases with CoreWeave, totaling $7 billion in revenue.
• Stock surges over 45% amid record trading volumes.
• Strategic pivot towards AI and HPC data centers solidifies growth trajectory.

Applied Digital Corporation (NASDAQ: APLD) has made a significant leap in the AI infrastructure domain by entering into two extensive 15-year lease agreements with CoreWeave, a cloud services firm backed by Nvidia. These contracts, valued at approximately $7 billion, are set to generate substantial revenue over their duration, marking a transformative phase for Applied Digital.

The leases involve Applied Digital providing 250 megawatts (MW) of IT power to CoreWeave's Ellendale, North Dakota, data center, with an option for an additional 150 MW. The initial 100 MW facility is expected to be operational by late 2025, followed by a 150 MW facility by mid-2026. A potential third 150 MW facility could launch in 2027, contributing to Ellendale's planned 1 gigawatt capacity.

This strategic move has been met with enthusiastic investor response. On June 2, Applied Digital's stock soared over 45%, closing at $10.14, driven by unprecedented trading volumes exceeding 127 million shares. This surge underscores market confidence in the company's direction towards AI and high-performance computing (HPC) infrastructure. 

Analysts have taken note of Applied Digital's momentum. JMP Securities recently raised its price target for APLD from $12.00 to $18.00, reflecting optimism about the company's growth prospects. 

CEO Wes Cummins emphasized the significance of the CoreWeave partnership, stating that 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." 

Applied Digital's transition from its origins in cryptocurrency mining to a focus on AI and HPC data centers represents a strategic realignment to meet the burgeoning demand for AI-driven infrastructure. The company's Ellendale campus is designed to accommodate high-density compute workloads, positioning it as a scalable hub for AI and HPC applications. 

Applied Digital’s growth trajectory is compelling. With a market cap of around $2.25 billion and revenue forecasted to grow at 37.4% annually—outpacing the broader U.S. market—the company appears well-positioned to capitalise on the AI data boom. Its dual revenue streams, Cloud Services ($88.1 million) and Data Center Hosting ($133 million), reflect a diversified model built for resilience.

Still, challenges remain. Applied has faced shareholder dilution and carries a beta of 5.87, signalling volatility. Analysts have flagged risks, with GuruFocus noting multiple warning signs. Yet, for now, the market’s verdict is clear: Applied Digital is an AI infrastructure player to watch.

With Ellendale’s first building breaking ground in 2025, the focus now shifts to execution. If successful, Applied Digital’s ambitious 1 GW vision could redefine the landscape for AI-driven data infrastructure—one MW at a time.