Pomegra
A Landmark Deal That Breaks the 1 GW Barrier
Applied Digital Corporation (NASDAQ: APLD) crossed a defining threshold on May 20, 2026, announcing a 15-year take-or-pay lease agreement with a U.S.-based, high investment-grade hyperscaler for its fourth AI Factory campus — Polaris Forge 3. The $7.5 billion deal, located in a northern state and engineered to deliver 300 megawatts (MW) of critical IT load, pushes the Dallas-based AI infrastructure developer past 1 gigawatt (GW) of total contracted capacity — a benchmark that few pure-play data center operators have reached. Shares climbed 7.92% during the session and extended gains in after-hours trading on May 20 into May 21 as investors processed the scale of the announcement.
- APLD stock gained 7.92% on May 20, rising from $36.62 to $39.52, with further after-hours momentum into May 21.
- The new 15-year take-or-pay lease at Polaris Forge 3 delivers 300 MW of critical IT load for AI training and inference.
- Total contracted lease revenue reaches $31 billion across four AI Factory campuses, or $73 billion if all renewal options are exercised.
The lease, structured on a take-or-pay basis over a 15-year base term, carries a total potential value of up to $18.2 billion if all renewal options are exercised, cementing one of the largest long-term AI infrastructure commitments in the sector's recent history. The hyperscaler in question is the same U.S.-based, investment-grade tenant that previously signed at Delta Forge 1 in April 2026, deepening what has become a high-value strategic relationship.
Polaris Forge 3: 600 Acres of Next-Generation AI Capacity
Polaris Forge 3 spans more than 600 acres and is purpose-built for high-density AI workloads, incorporating Applied Digital's proprietary waterless cooling technology, high-density power delivery infrastructure, and advanced liquid-cooling architecture. The campus is supported by approximately 430 MW of grid-connected utility power, with initial operations anticipated to commence in August 2027.
The design framework mirrors Applied Digital's proven AI Factory model — the same architecture powering Polaris Forge 1, Polaris Forge 2, and Delta Forge 1 — reinforcing the company's strategy of replicating scalable, high-efficiency campus deployments at speed. With Polaris Forge 3 now contracted, Applied Digital's portfolio spans 1,200 MW of critical IT load (net) across four campuses, backed by approximately 1,670 MW of utility power (gross).
"Polaris Forge 3 is a direct extension of what we've proven works: a disciplined, repeatable AI Factory model that delivers large-scale capacity to the world's most demanding compute customers," said Wes Cummins, Chairman and CEO of Applied Digital. "This second 300 MW lease with the same U.S. based high investment-grade hyperscaler reflects the confidence we've built through disciplined execution."
$31 Billion Revenue Backlog Reshapes the Investment Thesis
The total contracted lease revenue across Applied Digital's four AI Factory campuses now stands at $31 billion, with approximately 65% of contracted revenue backed by U.S.-based investment-grade hyperscalers. Should all renewal options across each campus be exercised, that figure rises to an industry-defining $73 billion — a backlog that rivals the contracted portfolios of far larger enterprise infrastructure peers.
The scale of this revenue backlog significantly de-risks the company's construction pipeline and near-term capital expenditure profile. Each campus operates under a take-or-pay structure, meaning contracted payments are obligated regardless of whether the tenant utilizes the full capacity — a critical distinction that provides a high-confidence baseline revenue floor for investors modeling future cash flows.
Analyst coverage has already reflected the shift in the company's risk profile. The average 12-month price target for APLD now stands at approximately $44.67 across 15 analysts, with the Street-high target reaching $65.00. Needham analyst John Todaro raised the firm's price target to $51 from $48 following recent contract activity, maintaining a Buy rating.
From Crypto Miner to AI Backbone: A Strategic Reinvention
Applied Digital's trajectory over the past 18 months represents one of the most decisive business model pivots in the Nasdaq's technology sector. The company, which previously operated crypto mining hosting facilities, has systematically repositioned itself as a builder and operator of large-scale AI data center campuses — a transformation rewarded with a stock performance that surpassed 200% gains in 2025.
In May 2026 alone, the company completed multiple strategic milestones: the separation of its Cloud Business via the establishment of ChronoScale as an independent public company on May 5, and the announcement of a $300 million Senior Secured Bridge Facility on May 4 — both moves designed to sharpen Applied Digital's singular focus on hyperscale AI Factory development.
Wes Cummins added that while executing leases representing 1.2 GW in eleven months represents a monumental operational achievement, the company is actively marketing more than 1.7 GW of additional grid-connected utility power across sites recently added to the portfolio — signaling that the current four-campus footprint is unlikely to be the ceiling.
Market Outlook: Infrastructure Scarcity Drives Hyperscaler Demand
The Applied Digital announcement arrives as the broader AI infrastructure sector contends with persistent power constraints, permitting bottlenecks, and accelerating demand from hyperscalers scaling large language model training and inference capacity. The willingness of a high investment-grade hyperscaler to commit to two separate 15-year, 300 MW take-or-pay leases with the same operator in under two months reflects the intensity of the data center capacity shortage gripping the industry.
With $31 billion in contracted baseline revenue, operational momentum across four campuses, a disciplined construction methodology, and an analyst consensus price target at a meaningful premium to current trading levels, Applied Digital has firmly established itself as a tier-one AI infrastructure partner for the world's largest compute consumers. The company's ability to market an additional 1.7 GW of utility power positions it for further large-scale lease signings as hyperscaler demand continues to outpace available supply through the second half of 2026 and into 2027.
Mentioned tickers: APLD
