APLD Stock Soars 42% after $7B Deal with CoreWeave (CRWV)

Tech company Applied Digital (APLD) has signed two big 15-year lease deals with CoreWeave (CRWV), which is a growing cloud company backed by Nvidia (NVDA). These agreements are expected to bring in about $7 billion in total revenue for Applied Digital over the length of the contracts. This news gave Applied’s stock a massive 42% boost at the time of writing, while CoreWeave’s stock is up almost 5%. It is worth mentioning that the leases are an important step for Applied as it works to become a real estate investment trust focused on data centers.

As part of the deal, Applied Digital will supply 250 megawatts (MW) of IT power to support CoreWeave’s artificial intelligence and high-performance computing systems at its Ellendale, North Dakota, data center. CoreWeave also has the option to use an additional 150 MW. Notably, the first 100 MW facility should be ready by late 2025, while the second 150 MW building is expected to be finished by mid-2026. In addition, a third building with another 150 MW could open in 2027. Interestingly, the Ellendale campus is designed to eventually handle up to 1 gigawatt of power.

As a result, CEO Wes Cummins said these long-term leases show that Applied Digital is becoming a key provider of infrastructure for the next wave of AI and computing technology. He also called CoreWeave the perfect partner as demand for AI grows rapidly. Indeed, CoreWeave is part of a new group of “neocloud” companies that rent out Nvidia chips to software developers and rely on companies like Applied Digital to cut down on the high costs of building and running AI-focused cloud services.

Which Stock Is the Better Buy?

Turning to Wall Street, out of the two stocks mentioned above, analysts think that APLD stock has more room to run than CRWV. In fact, APLD’s price target of $10.50 per share implies almost 6% upside versus CRWV’s 59% downside risk.