APLD Boosts Hyperscale Growth With 250MW AI Data Center Lease

Applied Digital APLD has taken a significant leap in its hyperscale strategy with a 250MW lease agreement with CoreWeave CRWV for its Ellendale campus. This high-profile win not only validates APLD’s aggressive buildout strategy but also places it firmly in the upper echelon of AI infrastructure providers.

CoreWeave, known for its deep GPU infrastructure and recent IPO momentum, will utilize the new liquid-cooled facility at Ellendale, which is purpose-built for AI workloads and slated to go live starting fourth-quarter 2025. The deal follows APLD’s earlier strategic financial partnerships with Macquarie and SMBC, which collectively unlocked up to $5.4 billion in financing, reinforcing confidence in the scalability of its platform.

Ellendale’s first 100MW facility is fully constructed, with the remaining 150MW to follow through 2026. Applied’s early bet on power infrastructure and land banking now gives it a competitive advantage, especially in a market where demand for AI data centers far exceeds supply. The lease also de-risks the Ellendale project, allowing Applied to unlock revenue potential earlier than expected while showcasing its ability to execute amid broader macro headwinds.

Notably, APLD is also exploring a strategic sale of its Cloud Services business, which had become a friction point in hyperscaler lease discussions. Shedding this segment could not only streamline operations but also support a future conversion to a REIT, potentially lowering its cost of capital and boosting its valuation.

With a 1.4GW pipeline and growing credibility among top-tier AI clients, APLD is emerging as a pivotal enabler in the AI compute race. While execution risks remain, especially on multi-phase deployments, this CoreWeave deal positions the company for stronger long-term cash flows and deep strategic relevance in the hyperscale AI era.

Competition Update

CoreWeave and Equinix EQIX are two key competitors to APLD, making significant hyperscale infrastructure investments. CoreWeave, a fast-growing AI-focused cloud provider, recently raised more than $1 billion to expand its GPU-powered data center footprint. It is rapidly scaling capacity to meet AI workload demand, positioning itself as a major alternative to traditional hyperscalers.

In October 2024, Equinix announced a joint venture with GIC and CPP Investments to raise over $15 billion for expanding its xScale data centers in the United States, adding more than 1.5 gigawatts of capacity to meet growing AI and cloud demands. Equinix's strategic move underscores its commitment to supporting hyperscale clients. With this initiative, Equinix solidifies its position as a key player in the evolving digital infrastructure landscape.

APLD’s Price Performance, Valuation and Estimates

Shares of APLD have surged 43.3% in the year-to-date period compared with the industry’s gain of 6.6%.

From a valuation standpoint, Applied Digital trades at a forward price-to-earnings ratio of 8.94, above the industry average as well as higher than its three-year median of 1.66. APLD carries a Value Score of F.

The Zacks Consensus Estimate for Applied Digitals’ fiscal 2026 earnings implies a 67.2% rise year over year.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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