Applied Digital Corporation experienced a remarkable surge in its stock price, climbing as much as 54% on Monday, reaching an intraday high of $10.54 before closing at $10.14, up 48%. This significant increase was driven by the announcement of two long-term lease agreements with CoreWeave, a prominent cloud services provider supported by Nvidia, projected to generate $7 billion in revenue for Applied Digital.
In these agreements, CoreWeave will secure 250 megawatts of data center capacity from Applied Digital’s facility in North Dakota, with an option to access an additional 150 megawatts. Wes Cummins, the Chairman and CEO of Applied Digital, expressed that these lease agreements reinforce the company’s position as a crucial player in supplying infrastructure essential for the evolving landscape of artificial intelligence and high-performance computing.
This partnership is particularly timely, as demand for data centers is surging, especially from prominent players in the AI sector such as Meta and Microsoft. A note from financial analysts at Needham indicated that these lease agreements might also attract other enterprise AI clients to consider Applied Digital for their data center capabilities. Notably, there is speculation that OpenAI, known for its substantial $4 billion deal with CoreWeave last month, could be a potential end customer for one of the leases.
The strategic alignment between Applied Digital and CoreWeave not only represents a significant revenue boost for Applied Digital but also highlights the growing importance of infrastructure to support AI advancements. As the demand for data center capacity continues to rise, this development positions Applied Digital favorably in the accelerating AI market.
Overall, this progress reflects the broader trend of increasing investments in AI infrastructure, and the future looks bright for applied digital solutions as they cater to an expanding market.