Applied Digital and CoreWeave Soar on Massive $7 Billion AI Infrastructure Agreement
Shares of Applied Digital (NASDAQ:APLD) experienced a significant surge, climbing approximately 48% on Monday. This followed the announcement of two long-term lease agreements with CoreWeave (NASDAQ:CRWV) for artificial intelligence (AI) data centers.
Did You Know?
CoreWeave, a company backed by Nvidia (NASDAQ:NVDA), also saw its stock climb about 8% following the announcement, reflecting positive market sentiment towards the deal.
The $7 Billion Deal: A Breakdown
The agreements outline a substantial financial commitment. Applied Digital anticipates roughly $7 billion in rental revenue over an approximate 15-year term. The structure of the deal is designed for stability, featuring lease payments set upfront and an annual escalator, regardless of project costs.
Strategic Implications
According to Chief Executive Wes Cummins, the agreements mark a significant step in the company’s strategic shift. The agreements advance the company’s strategic push into advanced compute infrastructure.
Data Centre Details
CoreWeave will deploy AI and high-performance computing hardware at Applied Digital’s new data center campus in Ellendale, North Dakota. Applied Digital is set to supply 250 megawatts of critical IT load, with the campus designed to accommodate up to 400 MW.
- Lease Structure: The leases encompass two data cell blocks: a 100 MW block and a 150 MW block.
- Expansion Option: CoreWeave holds an option for a third 150 MW block, indicating potential for further growth.
CoreWeave’s Market Performance
CoreWeave’s stock has shown notable activity. CoreWeave shares reached a record high of $130.76 on May 29 and began trading at $39 on March 28.
Pro Tip
Understanding the power capacity (measured in megawatts) is crucial in assessing the scale and potential of data centers. Higher capacity allows for more powerful computing infrastructure.
