Market reaction and deal overview
Applied Digital (NASDAQ:APLD) saw its stock climb 7% in after-hours trading on Wednesday after revealing a 15-year take-or-pay lease for Polaris Forge 3 with a U.S.-based high investment-grade hyperscaler. The base-term of the agreement is valued at approximately $7.5 billion in contracted revenue, with the contract rising to $18.2 billion should all renewal options be exercised. The arrangement secures 300 MW of critical IT load intended for large-scale AI training and inference workloads.
Portfolio impact and prior relationship
This transaction is the second lease Applied Digital has signed with the same hyperscaler, following a deal at Delta Forge 1 in April 2026. With Polaris Forge 3 included, the company reports total contracted lease revenue of $31 billion spanning four AI Factory campuses. If all renewal options across those agreements are exercised, that figure would grow to $73 billion.
Applied Digital now lists 1,200 MW of critical IT load contracted across its four campuses, which is supported by approximately 1,670 MW of utility power capacity. The company said roughly 65% of contracted revenue is backed by U.S.-based investment-grade hyperscalers.
Executive comment
Wes Cummins, Chairman and Chief Executive Officer of Applied Digital, described the Polaris Forge 3 lease as a reflection of confidence built through disciplined execution and the company’s ability to advance large-scale AI infrastructure projects consistently.
Polaris Forge 3 site and technical features
Polaris Forge 3 sits in a northern state and occupies more than 600 acres. The campus will incorporate Applied Digital’s waterless cooling technology alongside high-density power delivery and a liquid-cooling architecture. The company expects initial operations to begin in August 2027.
Power marketing and capacity
Applied Digital said it is actively marketing in excess of 1.7 GW of grid-connected utility power across recently added sites and existing locations. The new lease contributes to the company’s broader effort to secure long-term commitments for large blocks of power and capacity for AI workloads.
Key takeaways
- Applied Digital secured a 15-year take-or-pay lease for Polaris Forge 3 worth about $7.5 billion in base-term contracted revenue for 300 MW of critical IT load.
- This is the second lease with the same U.S. high investment-grade hyperscaler, following Delta Forge 1 in April 2026, bringing total contracted lease revenue to $31 billion across four AI Factory campuses.
- The company reports 1,200 MW of contracted critical IT load and approximately 1,670 MW of utility power backing those campuses; about 65% of contracted revenue is supported by U.S. investment-grade hyperscalers.
Risks and uncertainties
- Timing risk: Initial operations are expected to begin in August 2027, and that timetable may affect revenue recognition and operational readiness for Polaris Forge 3 - this impacts the data center and power infrastructure sectors.
- Concentration risk: A sizable portion of contracted revenue is tied to U.S.-based investment-grade hyperscalers, including repeat business from the same buyer, which concentrates counterparty exposure within cloud and hyperscale sectors.
- Execution risk: Delivery of the campus features - including waterless cooling, high-density power delivery, and liquid-cooling architecture - will be key to meeting the requirements of large-scale AI workloads and could affect commercial ramp if implementation challenges arise, influencing data center engineering and power markets.