Applied Digital Lands $5.2B AI Data Center Lease
Key insights
- Applied Digital's third deal with the same hyperscaler totals $5.2 billion over 15 years, covering 210 megawatts at Delta Forge 2.
- Full renewal options could push the contract to $12.7 billion over 30 years, with initial operations starting Q1 2028.
- Applied Digital's contracted portfolio now spans five campuses and 1.4 gigawatts, with base-term lease revenue reaching $36 billion.
Why this matters
Applied Digital's contracted base-term revenue now stands at $36 billion, with three deals sourced from a single undisclosed counterparty, meaning the company's financial trajectory is tightly bound to one hyperscaler's continued commitment. The take-or-pay structure shifts demand risk entirely to the hyperscaler, revealing how confident major cloud operators are in sustained AI compute requirements well into the 2030s. For data center operators and infrastructure investors, the Applied Digital model of pre-selling hyperscaler-anchored capacity is becoming a viable template for financing billion-dollar AI campuses without bearing speculative build risk.
Summary
Applied Digital's third lease with the same unnamed U.S. investment-grade hyperscaler covers 210 megawatts at Delta Forge 2 for $5.2 billion over 15 years, under a take-or-pay structure.
Delta Forge 2 will use waterless cooling and high-power-density AI infrastructure, with operations starting Q1 2028. Full renewals push the contract to $12.7 billion over 30 years.
Essentially: (Applied Digital, undisclosed hyperscaler) are locked into a deepening multi-deal relationship now backed by three separate long-term agreements.
- Base-term contracted revenue now sits at roughly $36 billion, potentially $86 billion with all renewals
- Portfolio spans five campuses totaling 1.4 gigawatts of critical IT load
- 70% of contracted revenue is backed by U.S. investment-grade hyperscalers
Stock rose 8.7% in extended trading after the June 8 announcement.
Potential risks and opportunities
Risks
- If the undisclosed hyperscaler cancels or restructures before Q1 2028, Applied Digital's $36 billion contracted revenue base loses its single largest anchor across three agreements
- Delta Forge 2's waterless cooling dependency creates operational exposure to water availability constraints and environmental regulations that could tighten between now and the 2028 launch
- Applied Digital's 8.7% extended-trading stock jump sets elevated market expectations; any construction delay or counterparty news before Q1 2028 could trigger a sharp reversal
Opportunities
- Competing independent data center operators can use Applied Digital's take-or-pay hyperscaler anchor structure as a negotiating template for their own long-term capacity deals
- Waterless cooling vendors and high-power-density rack suppliers are positioned for procurement conversations ahead of Delta Forge 2's construction ramp toward Q1 2028
- With $86 billion in potential renewal-extended revenue now disclosed, infrastructure-focused institutional investors have a clearer benchmark for pricing long-duration AI data center assets
What we don't know yet
- Identity of the hyperscaler: named only as a U.S. investment-grade hyperscaler across all three deals, with no attribution even by general category
- Construction financing: no details disclosed on how Applied Digital plans to fund the Delta Forge 2 build-out ahead of the Q1 2028 target
- Whether the two prior deals with the same hyperscaler share the same take-or-pay contract mechanics, or differ materially in structure
Originally reported by thestar.com.my
Read the original article →Original headline: Applied Digital Signs $5.2 Billion 15-Year AI Data Center Lease — Third Long-Term Deal With Same Anonymous Investment-Grade Hyperscaler, 210 MW at Delta Forge 2