Needham says Polaris Forge 3 lease agreement could drive Applied Digital stock higher
Applied Digital (APLD) rallied on May 21 after Needham said the firm’s 15-year lease agreement for 300 MW of critical capacity at its advanced Polaris Forge 3 data center campus in North Dakota will drive its share price higher.
In a research note this morning, analyst John Todaro told clients that the multi-billion-dollar hyper-scaler commitment offers exceptional visibility and predictability into future revenue.
Needham’s bullish call is particularly significant given Applied Digital stock has already charged an incredible 140% higher since late March.
Needham’s bullish view on Applied Digital stock
Needham contends that the newly minted Polaris Forge 3 anchor lease represents an unprecedented structural inflection point for Applied Digital’s valuation.
The baseline 15-year agreement guarantees an exciting $7.5 billion in contracted revenue, a figure that can inflate to $18.2 billion if expansion options are fully triggered by the domestic tier-1 hyper-scaler.
According to John Todaro, this transaction materially “de-risks” the capital expenditure needed for the North Dakota expansion phase.
By demonstrating a rapid sub-30-day lease closing timeline, Applied Digital proved its execution speed.
This accelerated pipeline visibility prompted Needham to explicitly raise its price target on APLD shares to $66, indicating potential upside of another 35%, roughly from current levels.
APLD shares remain a major AI beneficiary
Beyond the financial injection of the Polaris contract, Todaro’s broader bullish thesis rests heavily on Applied Digital’s systemic technological advantages.
The research firm emphasizes that Applied Digital is uniquely positioned to handle modern “high-density” artificial intelligence and high-performance computing (HPC) workloads.
This performance edge is directly attributed to the company’s forward-looking design philosophy that integrates ultra-dense power delivery networks and advanced direct liquid-cooling platforms.
By capitalizing on its strategic investments, such as early microfluidic micro-cooling infrastructure partnerships forged late last year, APLD successfully built a distinct competitive moat.
Needham indicates that this technical superiority positions Applied Digital shares to benefit from premium pricing power over less prepared, legacy data center peers.
How to play Applied Digital at current levels?
In short, the market’s huge reaction to the Polaris Forge 3 announcement signals a wider realization that raw power capacity has become the ultimate currency in the artificial intelligence economy.
With this lease, Applied Digital’s overall contracted multi-year pipeline has swollen to about $31 billion across its next-generation fleet.
This colossal backlog provides the enterprise with defensive, utility-like income insulation while simultaneously preserving hyper-growth operational upside.
As tier-1 cloud providers aggressively search for scarce “institutional-grade” real estate, Applied Digital’s rapid deployment architecture remains highly coveted.
Needham’s updated target reflects a firm conviction that as macro data center capacity faces severe supply squeezes throughout the tail-end of 2026, APLD stock will continue to command a premium multiple.
Note that Applied Digital currently sits firmly above its key moving averages (MAs), with an RSI in the mid-60s indicating intense buying pressure.
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