Applied Digital shares rip 48% higher on $7 billion CoreWeave AI lease agreement

Applied Digital's stock surged by 48% after announcing two substantial long-term lease agreements with CoreWeave, aimed at bolstering its artificial intelligence data center capabilities. Following this news, shares of Nvidia-backed CoreWeave also experienced an approximate 8% increase. The agreements are expected to generate $7 billion in rental revenue over a 15-year timeframe, with the terms fixed upfront and including an annual escalation regardless of actual costs, as detailed in a presentation to investors. "These newly signed long-term leases with CoreWeave signify a pivotal step in our strategic growth within advanced compute infrastructure," stated Wes Cummins, CEO of Applied Digital. The partnership will see CoreWeave supplying AI and high-performance computing infrastructure for Applied Digital's campus located in Ellendale, North Dakota. Applied Digital will deliver 250 megawatts of essential IT load to CoreWeave, with the campus designed to accommodate a total load of 400 megawatts. The lease encompasses two data cell blocks of 100 megawatts and 150 megawatts, with CoreWeave retaining the option for an additional block of 150 megawatts, according to investor materials. CoreWeave's share price has been on an upward trajectory in recent weeks, reaching a record high of $130.76 on May 29, after starting trading at $39 on March 28.