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APLD Boosts Hyperscale Growth With 250MW AI Data Center Lease
Applied Digital Applied Digital (US:APLD) ZACKSยท2025-07-23 15:16

Core Insights - Applied Digital (APLD) has secured a 250MW lease agreement with CoreWeave (CRWV) for its Ellendale campus, enhancing its position in the AI infrastructure market [1][9] - The new liquid-cooled facility at Ellendale is designed for AI workloads and is expected to commence operations in the fourth quarter of 2025 [2] - APLD's previous financial partnerships have unlocked up to $5.4 billion in financing, indicating strong confidence in its scalability [2][9] Infrastructure Development - The first 100MW facility at Ellendale is fully constructed, with an additional 150MW planned through 2026 [3] - APLD's early investments in power infrastructure and land banking provide a competitive edge in a market with high demand for AI data centers [3] Strategic Moves - APLD is considering a strategic sale of its Cloud Services business, which could streamline operations and facilitate a future conversion to a REIT [4] - This divestiture may lower the cost of capital and enhance the company's valuation [4] Market Position - APLD has a 1.4GW pipeline and is gaining credibility among top-tier AI clients, positioning itself as a key player in the AI compute sector [5] - The recent lease agreement with CoreWeave is expected to strengthen APLD's long-term cash flows and strategic relevance in the hyperscale AI market [5] Competitive Landscape - CoreWeave and Equinix (EQIX) are significant competitors, with both making substantial investments in hyperscale infrastructure [6] - Equinix has announced a joint venture to raise over $15 billion for expanding its xScale data centers, adding more than 1.5GW of capacity [7] Financial Performance - APLD's shares have increased by 43.3% year-to-date, outperforming the industry average gain of 6.6% [8] - The company trades at a forward price-to-earnings ratio of 8.94, above the industry average and its three-year median of 1.66 [11] - The Zacks Consensus Estimate for APLD's fiscal 2026 earnings suggests a 67.2% year-over-year increase [12]