An analyst from Lake Street has raised their price target for Applied Digital to $90.00. Applied Digital is a company that designs, develops, and operates data centers, which are facilities used to house computer systems and associated components. These centers are crucial for the growing artificial intelligence (AI) industry.
The new price target suggests a potential upside of approximately 95.45% from the stock's price of $44.00 at the time of the announcement. This positive outlook is supported by recent company developments. As highlighted by Benzinga, Applied Digital announced it has signed its fifth AI Factory campus lease for its Delta Forge 2 facility.
The deal is a 15-year "take-or-pay" lease with a U.S.-based hyperscaler, a term for a very large cloud service provider. This contract structure is beneficial as it guarantees Applied Digital revenue because the customer must pay for the service regardless of use. The agreement covers 210 MW of power.
This specific lease is expected to generate approximately $5.20 billion in revenue over its base term. The total value could potentially increase to $12.70 billion over a 30-year period if all renewal options are exercised. This is the third deal Applied Digital has secured with this same customer, indicating a strong business relationship.
With this new agreement, the company's total contracted base-term lease revenue across its portfolio now stands at $36.00 billion. This amount could grow to approximately $86.00 billion if all renewal options are exercised, providing a clear view of the company's long-term potential earnings.
