Shares of Applied Digital, a US firm that builds data centers for cloud providers, increased by 48% after the company announced two long-term lease agreements with CoreWeave for AI data centers.

CoreWeave, backed by Nvidia, also experienced an 8% rise in its shares following the announcement.

The agreements are projected to generate US$7 billion in rental revenue for Applied Digital over about 15 years. The lease terms include a fixed price with an annual increase, independent of project costs.

CoreWeave will provide AI and high-performance computing infrastructure at Applied Digital’s data center campus in Ellendale, North Dakota.

Applied Digital will provide 250 megawatts of critical IT load, with the campus capable of supporting a total load of 400 megawatts.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Long-term data center leases represent a new normal in the AI infrastructure race

The $7 billion, 15-year lease agreement between Applied Digital and CoreWeave reflects the massive capital shift toward securing AI computing capacity for the long term.

Industry projections show data centers will need a staggering $6.7 trillion in global investment by 2030, with $5.2 trillion specifically for AI-related infrastructure 1.

This explains why Wall Street reacted so positively to the deal (Applied Digital shares jumping 48%), as securing long-term AI infrastructure access has become strategically critical in a market where demand for computing power is projected to triple by 2030 1.

The agreement mirrors other major AI infrastructure commitments, including CoreWeave’s separate $11.9 billion deal with OpenAI and Microsoft’s planned $80 billion investment in AI data centers for fiscal 2025 2.

These extended lease agreements provide both parties with financial predictability and protection against market fluctuations in an environment where AI computing resources are increasingly scarce and valuable.

2️⃣ Power capacity has become the new competitive advantage in AI infrastructure

The Applied Digital deal’s specific mention of 250 megawatts of critical IT load highlights how power capacity has become a crucial differentiator in the AI data center market.

Global demand for data center energy is projected to double by 2028, reaching 100 gigawatts, with data centers expected to consume about 2% of global electricity by 2025 3.