Applied Digital (APLD, Financial) has announced two significant 15-year lease agreements with CoreWeave, a cloud service provider backed by NVIDIA. These agreements are projected to generate approximately $7 billion in revenue over the lease term for Applied Digital, potentially serving as a crucial lifeline for the company. As it transitions into a data center real estate investment trust, Applied Digital faces challenges in the data center hosting sector.
Following the announcement, Applied Digital's stock surged by 17% in pre-market trading. CEO Wes Cummins stated that these agreements reinforce Applied Digital's position as a key provider of next-generation AI and high-performance computing infrastructure. The long-term lease with CoreWeave marks a strategic expansion into advanced computing infrastructure.
CoreWeave is part of a new wave of cloud service providers focusing on renting NVIDIA's highly sought-after chips to software developers. Leasing data center infrastructure from companies like Applied Digital helps alleviate some financial burdens associated with offering AI-focused cloud services. CoreWeave's stock also saw a rise of nearly 4%.
