Applied Digital’s recent surge has caught the market’s attention. As of Wednesday, the stock has jumped 94% this week. Here are some of the key factors driving the rally.

Applied Digital, a developer of digital infrastructure for high-performance computing (HPC) applications, has signed two approximately 15-year lease agreements with AI cloud-computing startup CoreWeave this week.

Under the agreements, Applied Digital will provide 250MW of critical IT load to support CoreWeave’s AI and HPC infrastructure at its Ellendale, North Dakota data centre campus.

The company expects to generate approximately $7bn in total revenue over the lease terms.

Applied Digital shares soared 48.5% on Monday, gained 1.1% on Tuesday, and surged 29.3% on Wednesday.

Meanwhile, Both Applied Digital and CoreWeave are backed by Nvidia, the most valuable company in the world and the chipmaking giant most associated with the rise of artificial intelligence. Nvidia held roughly 7.7 million shares of Applied Digital and 24.2 million shares of CoreWeave as of March 31, according to a regulatory filing.

Additionally, after-hours on Wednesday, CoreWeave has disclosed in a 13G filing that it hold a 5.5% or a 13.06M share stake in the company. Applied Digital shares jumped another 9.4% in extended trading.

Moreover, analysts are also optimistic about this company.

B. Riley raised the firm’s price target on Applied Digital to $15 from $8 and kept a Buy rating on the shares. The announcement further affirms Applied’s ability to become a leading provider of high-performance compute infrastructure, contends B. Riley.

H.C. Wainwright analysts raised the price target for Applied Digital to $12 from $7, while maintaining their Buy rating on the stock. The revision follows Applied Digital’s recent announcement of a significant 15-year, $7 billion deal with CoreWeave for a 250MW project in Ellendale, North Dakota.

Craig-Hallum raised the firm’s price target on Applied Digital to $12 from $10 and keeps a Buy rating on the shares. The firm says that the deal with CoreWeave puts Applied Digital on the AI map. Craig-Hallum now waits for debt specifics and the 150MW option.

Citizens JMP raised the firm’s price target on Applied Digital to $18 from $12 and keeps an Outperform rating on the shares after Applied signed CoreWeave as its first meaningful customer for its 400 MW facility in North Dakota. The firm is not surprised to see the stock up on the news and expects this momentum to continue, the analyst tells investors in a research note.