Target Hospitality Corp. (NASDAQ:TH) shares climbed 25% on Wednesday after the company announced a multi-year agreement valued at more than $550 million with one of the world’s top five hyperscale technology companies to support a major data center project in North Texas.
Under the deal, Target Hospitality will build and manage a custom-designed residential community capable of housing about 4,000 people. Construction is set to begin immediately, with the first occupants expected to arrive in the third quarter of 2026, while full completion is projected for the second quarter of 2027.
The contract is expected to generate over $550 million in guaranteed minimum revenue during its initial five-year term, which runs through the first quarter of 2031. It also includes two optional two-year extensions, potentially extending the agreement until January 2035.
In addition to the base commitment, the deal could produce variable annual revenue of roughly $20 million to $40 million, depending on occupancy levels once the community is fully operational.
To complete the project, Target Hospitality will combine existing infrastructure with newly developed assets, resulting in an estimated net capital investment of $115 million to $125 million, with about 80% of the spending expected in 2026.
Following the announcement, the company raised its financial outlook for 2026, projecting total revenue between $360 million and $370 million, with adjusted EBITDA expected to range from $70 million to $80 million.
Total capital expenditures for 2026 are now forecast between $220 million and $240 million, excluding potential acquisitions.
Looking further ahead, Target Hospitality said it expects to reach annualized revenue above $500 million and adjusted EBITDA exceeding $160 million by mid-2027, assuming the variable revenue component of the contract reaches the midpoint of its projected range.
Target Hospitality provides integrated modular accommodation and hospitality solutions across North America, and the new agreement marks a major expansion of its Workforce Hospitality Solutions division as the company continues to diversify beyond its traditional end markets.