Applied Digital (APLD) Skyrockets on AI Deals

Surging Stock Price: Applied Digital Corp (NASDAQ: APLD) recently hit a 52-week high around $24.85 per share, after a year-to-date gain of over 200% ^[1]. The stock is up ~211% in 2025 and has vastly outperformed the S&P 500 (up ~13% YTD) ^[2]. Shares have nearly tripled in the last month, reaching all-time closing highs (around $24.45 on Sept 22) amid a multi-week winning streak ^[3].
Recent Momentum & News: In September 2025, APLD extended a 10+ day rally fueled by major AI infrastructure contracts and partnerships. The company inked expanded data center leases with CoreWeave – boosting total contracted capacity to 400MW and securing about $11 billion in future lease revenues ^[4] ^[5]. This highlighted APLD’s successful pivot from crypto-mining services to what it calls “AI Factories,” positioning it to capitalize on booming demand for AI computing ^[6]. The stock’s surge was also supported by a recent $50 million debt financing from Macquarie to fund expansion ^[7], and optimism around APLD’s inclusion in Nvidia’s AI investment portfolio (Nvidia owns ~7.7 million APLD shares) ^[8].
Analyst Sentiment: Wall Street analysts are bullish but playing catch-up. About a dozen analysts rate APLD a “Buy” or better ^[9]. Firms like B. Riley and Compass Point initiated or reiterated Buy ratings over the summer ^[10]. However, the stock’s rapid ascent pushed it above the average 12-month price target (roughly $20–21 per share) ^[11]. Price targets range widely from $13 up to $30 ^[12], reflecting both enthusiasm for APLD’s growth and caution about its valuation. Notably, APLD’s recent ~$24+ price exceeds the consensus target (~$20.55) ^[13], prompting some analysts to suggest the market may be ahead of fundamentals.
Financial Performance: Applied Digital is growing revenue quickly but remains unprofitable as it scales. In the most recent quarter (fiscal Q4 2025, reported July), revenue jumped ~41% year-over-year to ~$38 million ^[14]. However, the company posted a net loss (−$0.12 EPS for the quarter) and negative profit margins (net margin around –107% in the latest quarter) ^[15]. APLD’s EBITDA is improving (it reported about $10 million in adjusted EBITDA in an earlier quarter) ^[16], but high development costs and interest expenses have kept net income in the red. The company carries significant debt to finance its data centers (debt-to-equity ratio ~1.36) ^[17], though it has secured major funding commitments (e.g. a $375 million bank financing and up to $5 billion from Macquarie for future projects) ^[18].
Industry Role & Outlook: APLD operates in the converging realms of AI, cloud data centers, and cryptocurrency infrastructure. It originally built high-capacity data centers for crypto mining clients, but is now refocusing those facilities toward AI and high-performance computing (HPC) workloads. The company was even recognized as the “Best Data Center in the Americas 2025” by Datacloud ^[19]. Its flagship Polaris Forge campus in North Dakota can scale to 1 gigawatt and leverages cheap power and cooling to attract hyperscale AI tenants ^[20] ^[21]. In August, Applied Digital announced a new $3 billion “Polaris Forge 2” campus (280MW) to break ground in September 2025, further expanding capacity by 2026–2027 ^[22] ^[23]. This aggressive expansion aims to meet surging AI compute demand, but also means APLD’s fortunes are tied to a few large customers (like CoreWeave). Any pullback by a key client could impact its future cash flows ^[24]. Competitors in the broader data center arena include giants like Equinix (EQIX) and cloud providers, but APLD’s niche is purpose-built AI infrastructure in low-cost locations. Its closest peer may be CoreWeave itself – a fast-growing AI cloud provider that both partners with and relies on APLD’s facilities.

Stock Price & Recent Performance

Applied Digital’s stock has been on a tear in 2025, dramatically outperforming the broader market. As of September 23, 2025, APLD traded around $24–25 per share, near its highest levels ever. In fact, the stock reached a new 12-month (and all-time) high of about $24.85 intraday on Sept 22-23 ^[25]. This represents a ~19% jump in a single day and capped off an extraordinary run: the share price climbed roughly +47% over a 10-day winning streak in mid-September ^[26]. Year-to-date, APLD has now soared over 200% (for context, the S&P 500 is up only ~13% in the same period) ^[27].

Such momentum has dramatically increased APLD’s market capitalization (now around $6–7 billion) and put the stock 638% above its year-ago level ^[28]. In early January, APLD was trading in the single digits; by late September it’s in the mid-$20s ^[29]. The 52-week range spans from a low of ~$3.30 to recent highs above $24 ^[30] – reflecting the explosive growth story that investors are betting on.

However, volatility is high. The stock’s beta is measured above 6 ^[31], indicating extreme swings relative to the market. In fact, over the past year APLD saw 96 daily moves over 5% up or down ^[32]. Recent trading exemplified this turbulence: after a huge rally into Sept 22, the stock actually pulled back ~0.6% the next day (Sept 23) as some traders took profits ^[33]. Intraday on Sept 23, shares opened higher (around $25) but then cooled off to ~$24.28 by midday ^[34]. This slight dip still left the price roughly 211% above where it began 2025 ^[35].

Short-term trend: Over the past week, APLD is up roughly 20–25% thanks to a string of upbeat news (detailed below). Over the past month, the stock has nearly doubled in value as enthusiasm around AI infrastructure reached fever pitch. It’s worth noting APLD’s rally coincided with CoreWeave’s blockbuster IPO (another AI data center firm backed by Nvidia) and generally bullish sentiment for anything AI-related. By contrast, just six months ago APLD was trading closer to $8–10 per share; the acceleration since summer has been remarkable.

Investors should be prepared for sharp swings going forward. With a large retail following and relatively low float, APLD can be prone to both euphoric spikes and sudden corrections. The recent surge has pushed the stock above most analyst price targets (see next section), which could lead to bouts of profit-taking or volatility as the market digests new information.

September 2025 News & Catalysts

1. Major AI Lease Deals – $11 Billion Contracted Revenue: The single biggest catalyst powering APLD’s recent run was the announcement (in late August and early September) of expanded long-term leases with CoreWeave, a leading AI-focused cloud provider. On August 29, Applied Digital revealed a new 150 MW lease agreement with CoreWeave at its North Dakota “Polaris Forge 1” campus ^[36]. This comes on top of two earlier 15-year CoreWeave leases signed in May, and together CoreWeave will occupy 400 MW of APLD’s data center capacity ^[37]. According to the company, the combined value of these agreements is about $11 billion in contracted lease revenue over their terms ^[38].

This is a game-changing deal for Applied Digital. It essentially locks in a massive future revenue stream (spread over 10–15 years) and validates APLD’s strategic shift to serving AI computing clients. The news “boosted Applied Digital’s total contracted capacity to 400 MW” and underscored the company’s move away from its crypto-mining roots towards enterprise AI infrastructure ^[39]. Investors cheered the development – APLD stock jumped nearly 50% on the day of the initial announcement back in May, and the momentum carried through the summer ^[40]. Even in September, the continued positive buzz around the CoreWeave partnership was lifting shares: for example, on Sept 22 the stock spiked ~6.6% as it “extended its impressive winning streak” on optimism from these AI contracts ^[41].

Importantly, this deal positions Applied Digital as a key landlord/operator for AI data centers. CoreWeave (which counts OpenAI, Microsoft, and Meta as end clients) will rely on APLD’s facilities to power cutting-edge AI workloads. In effect, APLD is supplying the infrastructure backbone for some of the most computationally intensive applications. This transformation – from hosting blockchain miners to hosting Nvidia GPU clusters for AI – is exactly what management has been touting as its “AI Factory” strategy.

“The stock’s recent winning streak was fueled by expanded data center leases with cloud provider CoreWeave…highlighting the company’s successful shift from crypto-focused data centers to ‘AI Factories.’” ^[42]

The leases also bring concentration risk: CoreWeave will become a very large customer, accounting for the bulk of APLD’s future capacity. Analysts have noted that while multi-billion dollar contracts provide predictable revenue, they also “reinforce reliance on a limited number of large customers.” ^[43] Applied Digital acknowledges that if a key client like CoreWeave reduces its commitments, it could significantly impact cash flows ^[44]. For now, however, demand far exceeds supply in the AI compute space – so APLD’s immediate challenge is executing on these contracts (delivering facilities on time) rather than finding customers.

2. New $3 Billion AI Campus – Expansion in North Dakota: In addition to filling its existing campus, Applied Digital is doubling down on capacity. On August 18, the company announced plans to break ground on “Polaris Forge 2,” a $3 billion AI data center campus near Harwood, North Dakota, in September 2025 ^[45]. This second campus is designed for an initial 280 MW of capacity (with room to expand further) and is expected to begin initial operations in 2026, reaching full capacity by early 2027 ^[46].

The Polaris Forge 2 project signals strong confidence in continued AI infrastructure demand. North Dakota has become a strategic location for APLD due to its abundant low-cost power, available land, and business-friendly environment ^[47] ^[48]. The state’s officials have openly praised Applied Digital for investing in rural communities and “bringing high-tech infrastructure and long-term economic opportunity” to the region ^[49]. Once completed, the new campus will create over 200 full-time jobs and solidify North Dakota’s role as a national hub for AI data centers ^[50].

For investors, Polaris Forge 2 represents both growth and execution risk. It’s a massive capital project – $3 billion is roughly half of APLD’s current market cap. Funding will likely involve a mix of debt, equity, or partner financing. Encouragingly, APLD has an interested anchor tenant: management said it is in advanced talks with a U.S. “investment-grade” hyperscaler to lease this new campus ^[51]. This could de-risk the project if finalized. Additionally, Applied Digital’s strong financial backers (e.g. Macquarie Asset Management’s commitment up to $5 billion for expansion) give credibility that the company can raise the needed capital ^[52]. Still, investors will watch how smoothly APLD can scale from operating one campus to multiple large sites simultaneously.

3. Nvidia and Other Partnerships: A quieter but meaningful factor in APLD’s story is its relationship with Nvidia (NVDA) and other tech partners. Nvidia – the foremost maker of AI chips – owns an equity stake of about 3% in Applied Digital ^[53] ^[54]. It acquired ~7.7 million shares (worth ~$77 million as of mid-2025) as part of its strategy to back emerging AI infrastructure firms ^[55]. Nvidia has also granted Applied Digital “elite partner” status in its partner network, giving APLD priority access to Nvidia’s latest GPUs ^[56] ^[57]. This is a crucial advantage – in an environment where advanced chips like the H100 are in short supply, APLD’s close ties with Nvidia help ensure it can procure hardware for its data centers. The Nvidia connection also serves as a stamp of legitimacy; as one analyst put it, “Nvidia’s backing makes [APLD] something of a favored nation” among AI data center plays ^[58].

Applied Digital has been forging other industry partnerships as well. For instance, it teamed up with ABB, a leader in power and automation, to implement innovative high-efficiency power infrastructure at its 400 MW campus in ND ^[59] ^[60]. ABB’s advanced medium-voltage UPS systems should enable APLD’s data centers to handle high power loads for AI more efficiently and reliably ^[61] ^[62]. As APLD builds out massive facilities, such collaborations help reduce operating costs and improve performance – factors that can boost profit margins in the long run.

Finally, APLD has secured significant financing deals to support its growth. Beyond the aforementioned Macquarie investment pipeline and the SMBC $375 million loan, the company in August raised $50 million in equipment financing from Macquarie Equipment Finance ^[63]. This debt funding is specifically to procure hardware and build out the new capacity tied to the CoreWeave leases. It allows APLD to expand without immediate heavy equity dilution, using predictable lease revenue to service the debt. These financial moves, alongside strategic partnerships, show a concerted effort by management to seize the current AI boom opportunity while managing the risks of rapid expansion.

4. Earnings and Business Updates: While no quarterly earnings were released in September 2025 (the next earnings likely due in October for fiscal Q1 2026), there have been other notable business updates. In April, APLD’s board approved a plan to sell the company’s Cloud Services division ^[64]. This unit was providing on-demand GPU cloud services (essentially a small cloud for AI/ML), but management decided to refocus on the core data center hosting business. The sale (if completed) would simplify APLD’s operations, potentially even paving the way for a future conversion into a data center REIT (real estate investment trust) – a possibility the CEO has mentioned for the long term ^[65]. APLD also hired a new COO, Laura Laltrello, to bolster execution as the firm scales up its AI centers ^[66].

On the crypto side of the business, APLD still operates about 286 MW of traditional data centers (at Jamestown and Ellendale) serving crypto mining clients ^[67]. Revenue from these legacy hosting operations has been relatively flat or slightly down (crypto mining demand cooled in the past year), but these facilities are running at full capacity and generating steady cash flow ^[68]. The company is likely to either transition some of this capacity to AI tasks or maintain it for diversification. In any case, APLD’s narrative and investor interest now center squarely on its AI/HPC prospects rather than crypto.

Analyst Opinions & Stock Forecasts

Wall Street coverage of Applied Digital has grown as the stock’s profile has risen. Overall, analysts maintain a bullish outlook, though many are wrestling with valuation after the recent parabolic move. According to Yahoo Finance and TipRanks data, the consensus rating on APLD is a “Strong Buy” with approximately 9–12 analysts currently covering the stock ^[69]. All of these analysts rate APLD as either Buy or Outperform (no hold or sell ratings at present). This optimistic consensus reflects confidence in APLD’s growth trajectory and execution on its AI data center strategy.

Price Targets: The median 12-month price target for APLD is around $20–21 per share ^[70] ^[71]. For example, AInvest reports an average target of $20.55 among 9 analysts, with a low estimate of $13 and a high of $30 ^[72]. TipRanks similarly lists an average target of ~$20.19 (range $13 to $30) ^[73]. This range underscores a split in views: some analysts see massive upside potential (the $30 target implies further ~20%+ gains), while others urge caution (the $13 low target implies the stock could roughly halve from current levels). Notably, even the high end of published targets ($30) is only slightly above the recent trading price, and the average target of ~$20 actually implies a slight downside from $24+ ^[74] ^[75]. In other words, APLD’s stock has outrun the consensus expectations on Wall Street in the short term.

Several firms have updated their views in light of APLD’s rapid rise and business developments:

Roth Capital – Maintains a Buy rating. (Roth was an early supporter; as of June it reiterated Buy, though its price target hasn’t been made public in recent sources.)
B. Riley Financial – Raised its target price from $8 to $15 back in June, while affirming a Buy rating ^[76]. B. Riley cited the company’s successful pivot to AI hosting and the strong pipeline of demand as reasons for optimism.
Citigroup – Initiated or maintained an Outperform rating (Buy equivalent) in early June ^[77].
JMP Securities – Lifted its price target from $12 to $18 in June and rates the stock “Market Outperform” ^[78].
Needham & Co. – Recently raised its target from $12 to $16 as well ^[79], reflecting the improved outlook from the CoreWeave deals.
Compass Point – Started coverage on Sept 15 with a Buy rating ^[80]. (Compass Point is relatively bullish; it may be the one with a $30 high-end target, though that is not confirmed in the excerpt.)
MarketBeat analyst survey – Reports one Strong Buy and 12 Buy ratings on APLD stock, with an average price target of $15.64 (likely based on slightly older data pre-rally) ^[81] ^[82]. This average is notably below current prices, again highlighting how quickly sentiment has shifted.

“Several brokerages recently issued reports on APLD…One investment analyst has rated the stock Strong Buy and twelve have given a Buy…the stock currently has an average price target of $15.64.” ^[83] ^[84]

Analyst Commentary: The overarching tone from analysts is that Applied Digital is executing well in tapping the AI infrastructure boom, but the stock’s valuation is becoming a concern. Some key themes from recent commentary:

Validation of Strategy: Analysts view the CoreWeave contract and the Macquarie financing as validation of APLD’s business model. These deals de-risk the revenue outlook (with ~$11B contracted) and bring in credible partners, which “underscores the trust that leading institutions place in the value of [APLD’s] data centers” ^[85]. The pivot to AI data centers is seen as the right move at the right time.
Growth Trajectory: There’s broad agreement that APLD’s growth will be extraordinary if it executes. Some projections show revenue climbing from ~$77M (FY2024) into the hundreds of millions within a couple of years, and possibly reaching $750M+ by 2028 ^[86]. Achieving that would require ~74% compound annual growth ^[87], which is ambitious but not impossible given multi-year contracts in hand. Analysts often mention that APLD could eventually produce strong earnings if economies of scale kick in (SimplyWall.St’s model, for instance, forecasts ~$102M in net income by 2028) ^[88].
Valuation & Risks: The flip side to rapid growth is rich valuation. At ~$24/share, APLD’s market cap is around $6–7 billion, which prices in a lot of future success. The stock trades at over 20 times trailing sales and, since earnings are negative, a very high multiple of any near-term EBITDA. Analysts caution that the current price “represents a decline of ~15% from the last closing price” when compared to the average target, implying the stock might be ahead of itself ^[89] ^[90]. Key risks flagged include:
- Customer Concentration: Relying on one or two big clients (like CoreWeave) for the bulk of revenue ^[91].
- Execution Risk: Building huge data centers on time and on budget, and managing supply chain (e.g. getting enough Nvidia GPUs).
- Financing and Dilution: Needing to raise capital for expansion could dilute shareholders or add debt burden. (Though APLD’s successful loans this year have eased this worry somewhat.)
- Competitive Landscape: The AI data center space is getting attention – established players (e.g. large cloud providers, data center REITs) could also compete or invest heavily, potentially squeezing smaller firms in the long run.

Overall, analysts appear constructive but cautious – they like the company’s trajectory but are aware that the stock’s momentum has been speculative to a degree. For investors, this means doing due diligence on whether APLD can grow into its valuation. Positive analyst coverage (especially any further target upgrades closer to current prices) could provide support to the stock, while any disappointment (such as construction delays or an earnings miss) could trigger sharp declines given the lofty expectations.

Financial Performance Overview

Applied Digital is in the early stages of scaling its business, and its financial statements reflect a company investing for growth. Here’s a snapshot of key financial metrics and recent performance:

Revenue Growth: APLD’s revenues are rising rapidly thanks to its new business lines. In the quarter ended May 31, 2025, the company posted $38.0 million in revenue, a +41% increase year-over-year ^[92]. For the full fiscal year 2025 (ending May), total revenue is estimated around $155 million (up from ~$55 million in FY2024), though this includes both crypto hosting and the newer cloud services. The drivers of growth have been the cloud/GPU services and initial AI hosting deals – e.g., revenue from the “Cloud Services” segment was up +220% year-on-year in the Feb 2025 quarter ^[93]. As new AI leases commence (the first 100MW for CoreWeave is scheduled to go live in Q4 2025, and another 150MW in mid-2026 ^[94]), APLD’s top-line is expected to accelerate further.
Earnings and Profitability: Despite strong revenue gains, Applied Digital is not yet profitable. The company consistently reports net losses, as it expenses heavy depreciation, interest on new debt, and ongoing operating costs. In fiscal Q4 2025, net income was roughly –$0.12 per share (a loss) ^[95]. In Q3 2025, the loss was –$0.16 per share GAAP (–$0.08 on an adjusted basis) ^[96]. Net profit margins are deeply negative (around –100% to –150% of revenue in recent quarters) ^[97], which is not unusual for a company building out large assets that aren’t fully revenue-producing yet. The EBITDA picture is better: APLD achieved approximately $10 million in Adjusted EBITDA in the Feb–May quarter ^[98], indicating that at the operational level (excluding some costs) the business is nearing breakeven. As more capacity comes online and revenue scales, margins should improve via fixed-cost leverage – but it may be a couple of years before net profits turn positive, according to analyst forecasts (consensus expects a loss of ~$0.96 per share for the current fiscal year) ^[99].
Cash Flow & Financing: Building data centers is capital-intensive. Applied Digital has been funding its expansion through a combination of equity, debt, and strategic investments:
- The company raised money in its April 2022 IPO ($5 per share) and subsequent equity offerings, but the stock’s recent appreciation means it has more flexibility (its share currency is stronger if it chooses to issue stock).
- It has tapped debt markets: in April 2025, APLD closed a $375 million financing with SMBC bank ^[100] ^[101]. This allowed them to pay off a prior note to Macquarie and finance construction of the first two buildings at Ellendale. In August 2025, they also secured a $50 million equipment loan to buy servers/GPU clusters for the CoreWeave expansion ^[102].
- Importantly, Macquarie Asset Management (a large infrastructure investor) has an arrangement to invest up to $5 billion in APLD’s data center development ^[103]. This likely means Macquarie could fund or co-own future sites (possibly Polaris Forge 2, etc.), taking some burden off APLD’s balance sheet.
- As of the last report, APLD’s debt-to-equity ratio stood at about 1.36, indicating a high level of leverage for a tech company ^[104]. This isn’t alarming for an infrastructure business with steady lease income, but it does limit near-term free cash flow since interest expenses have jumped (interest cost was $8.9M in the Feb 2025 quarter, up +87% YoY) ^[105].
Margins and Costs: The cost structure is evolving. Cost of revenues (power, maintenance, depreciation on data centers) was $49.1M in Q3 2025, up only 4% YoY despite a 22% revenue gain ^[106] – a positive sign that incremental revenue from AI services has high gross margin. Meanwhile, operating expenses (SG&A) actually fell 24% YoY in that quarter to $22.7M ^[107]. This drop was due to reclassifying some depreciation to cost of goods (since GPU clusters moved from idle to revenue-generating), but it shows that overhead is not ballooning out of control. APLD will need to keep a tight lid on costs as it grows. One big expense is depreciation of equipment (GPUs have a shorter useful life than buildings), which affects GAAP earnings but is a non-cash charge.
Balance Sheet Health: Exact cash on hand as of the latest quarter isn’t cited here, but the company likely had tens of millions in liquidity after the SMBC loan and prior cash balances. It also owns substantial assets (data center property and equipment). A risk to watch is if APLD needs to raise more equity capital quickly – doing so at current high stock prices would be much less dilutive than if the stock were lower, so the company might choose to bolster its coffers opportunistically. Conversely, successful execution and growing EBITDA could allow it to fund more from internal cash flows in the future.

In summary, Applied Digital’s financials reflect a “land-grab” phase. The company is pouring money into expanding capacity and securing major clients, which has meant losses now for (hopefully) outsized profits later. Investors appear willing to tolerate these losses given the backlog of $11B in contract value and the strong gross margins of data center leases once operational. Nonetheless, keeping an eye on execution metrics – like hitting construction timelines, maintaining liquidity, and achieving the expected revenue ramp – will be crucial in upcoming earnings reports.

APLD’s Role in the Industry and Market Comparison

Applied Digital sits at the crossroads of several hot sectors: data center REITs, cloud computing, blockchain mining, and now AI hardware infrastructure. Its evolution is a case study in tech industry adaptation:

From Crypto to AI: APLD started (as “Applied Blockchain, Inc.”) by providing hosting for cryptocurrency miners – essentially offering cheap power and space for Bitcoin mining rigs. This put it in competition with crypto mining firms and data center providers alike. However, as crypto markets became volatile and AI demand exploded in late 2022–2023, APLD smartly repurposed its strategy. The company began marketing its facilities as high-density computing centers for AI and HPC, dubbing them “AI Factories.” It installed GPU clusters and launched cloud services for AI workloads. By 2025, management made the decisive move to pivot fully into leasing large-scale data center capacity to AI cloud providers (and to exit its smaller cloud service operation) ^[108]. This pivot has been hailed as timely – it aligns APLD with one of the strongest investment themes (AI), rather than the struggling crypto sector. As a result, APLD’s stock fortunes have diverged from pure crypto-related peers and now trade more in line with AI beneficiaries.
Competitive Landscape: Who does Applied Digital compete with? On a broad level, any company building and operating data centers for enterprise clients is a competitor. This includes huge, established players like Equinix (EQIX) and Digital Realty (DLR) – multibillion-dollar REITs that provide co-location and interconnection services globally. However, those incumbents historically focused on traditional IT and cloud hosting; APLD’s niche is purpose-built, GPU-centric facilities in low-cost locations. In that sense, its closest comparisons are emerging AI infrastructure specialists. Notably, CoreWeave (CRWV) – APLD’s major customer – can also be seen as a peer/competitor, since CoreWeave builds some of its own data centers and offers AI compute to end-users (CoreWeave recently went public and its stock has soared over 250% post-IPO, reflecting enthusiasm for AI infrastructure) ^[109] ^[110]. Other peers might include Lambda Labs, Phoenix Datacenter ventures, or cloud divisions of big tech focusing on AI (though hyper-scalers like AWS or Azure generally build in-house). Simply Wall St. lists Equinix and CoreWeave as comparable companies to APLD ^[111], which underscores how APLD straddles the line between being an owner/operator (like Equinix) and serving the AI cloud market (like CoreWeave).
Market Position and Differentiators: Applied Digital’s value proposition centers on cost-effective, quickly deployable, high-performance computing sites:
- It chooses locations (North Dakota, and previously Texas) with cheap electricity and cool climates (for efficient cooling), enabling lower operating costs. North Dakota’s power also includes renewables, helping sustainability goals ^[112].
- APLD has developed proprietary waterless cooling and modular designs, allowing it to set up large-scale data centers faster than traditional builders ^[113]. Speed is critical given the urgency for AI compute capacity.
- The company’s strategy of partnering with local utilities and governments yields incentives and smooth development processes (e.g., support from local officials in ND as evidenced by quotes from the Governor and economic developers) ^[114] ^[115].
- By focusing on leasing entire buildings to single tenants (like CoreWeave) on multi-year contracts, APLD secures long-term revenues. This is somewhat analogous to a REIT with anchor tenants, rather than the short-term or retail colocation model. It’s a relatively new model in AI – essentially wholesale data center leasing for AI superclusters – and APLD is at the forefront of it.
Industry Trends Benefiting APLD: The obvious tailwind is the AI compute boom. Companies training large AI models (like GPT-4/5, etc.) require tens of thousands of GPUs and massive power, straining the existing data center supply. Hyperscalers and startups alike are racing to add capacity, which benefits companies like Applied Digital that can supply ready-to-go infrastructure. Even after the initial surge, the long-term trend of digital transformation, cloud AI services, and potentially the rise of AI-as-a-Service means robust demand for HPC hosting. Additionally, APLD benefits from the trend of outsourcing – many firms (even big cloud providers) are willing to lease capacity from third parties if it’s faster or cheaper than building themselves. CoreWeave’s deal with APLD is a prime example: rather than build everything in-house, CoreWeave opted to lease in North Dakota, effectively outsourcing part of its growth. If more AI firms or cloud providers take a similar approach, APLD could find additional major clients.
Challenges and External Factors: It’s not all clear skies. The data center industry can face regulatory and community hurdles – large power-hungry facilities sometimes meet opposition over environmental or grid impact concerns. APLD has navigated this by choosing friendly locales and using renewable energy, but as it scales to 1GW+ it must maintain good relations and possibly upgrade grid infrastructure (with partners like the local electric cooperatives) ^[116] ^[117]. Another factor is the cyclical nature of tech: if the AI investment cycle slows (for example, due to economic downturn or AI saturation), demand for new capacity could dip. Moreover, if cryptocurrency markets rebound strongly, APLD’s legacy crypto clients might want more capacity or better terms – APLD will have to balance legacy vs. AI clients for optimal use of its resources.
Comparative Metrics: Compared to data center REITs, APLD’s stock trades at a premium on growth prospects but has lower current yield (no dividend, whereas REITs often pay dividends). Versus pure-play crypto miners or infrastructure, APLD now enjoys a higher valuation multiple thanks to its AI narrative – many crypto mining stocks languish with low multiples due to uncertain futures, whereas APLD is valued akin to a high-growth tech firm. If we compare APLD to CoreWeave (a private company until recently, now listed as CRWV): CoreWeave reported ~$982M in Q1 revenue (with insane 420% growth) ^[118] and is investing $6B in new facilities ^[119]. CoreWeave’s market cap after IPO skyrocketed (north of $30B by some estimates, given its stock above $140) ^[120]. In that light, APLD’s ~$6–7B value might appear more reasonable if one believes it can eventually reach similar revenue scale (though CoreWeave’s model is different as a service provider).

In essence, Applied Digital has carved out a promising spot in the AI gold rush, providing the picks and shovels (i.e., the physical infrastructure) needed to fuel AI computation. It is among the first publicly traded pure-plays in AI data center leasing, which makes it both exciting and speculative. The company’s execution in the next 12–24 months will determine if it solidifies into a stable, cash-generating infrastructure firm (perhaps even REIT-like with steady leases), or if it remains a high-beta story stock riding AI hype.

For now, its competitors are largely those who might snag similar deals – other data center builders, deep-pocketed cloud giants, or possibly new entrants drawn by the success of APLD and CoreWeave. Investors should watch announcements from peers and overall AI hardware spending trends as signals for APLD’s continued growth potential.

Conclusion and Outlook

Applied Digital’s stock story in 2025 reads like an embodiment of the AI revolution’s spillover effects. A relatively small company that reinvented itself from crypto infrastructure to AI data centers has seen its market value explode, thanks to huge contract wins and investor fervor for anything AI-related. The key question now: Can APLD live up to the hype and justify its valuation?

On the bullish side, APLD has real assets and contracts underpinning its meteoric rise. A $11 billion lease backlog, partnerships with marquee names (Nvidia, CoreWeave), and expansion projects already underway give it tangible credibility. If management executes well – delivering new facilities on schedule, controlling costs, and perhaps signing one or two more big tenants – the company could quickly grow into a major player in the data center industry. Revenue could multiply over the next few years, potentially turning the current losses into substantial profits at scale. In that scenario, today’s $24 stock price might even prove modest.

On the cautious side, investors must acknowledge the risks. APLD is priced for aggressive growth, and any stumble could result in a sharp correction. The stock’s volatility means new investors stepping in now have to stomach big swings. It’s also possible that as excitement cools, APLD’s valuation multiples contract (as often happens after initial euphoria). With the stock already above many analyst targets, future gains might rely on upward earnings revisions or new blockbuster deals.

In the coming days and weeks, keep an eye out for September-quarter earnings (likely in October) where the company may provide updates on construction progress and perhaps revenue guidance for the CoreWeave ramp-up. Also, any news of additional contracts – for example, if that “investment-grade hyperscaler” for Polaris Forge 2 is announced – would be a significant catalyst. Conversely, hints of delays, increased costs, or insider selling (note that CEO Wes Cummins and other insiders sold some shares in early September when the stock was around $15 ^[121]) could weigh on sentiment.

To sum up, Applied Digital has rapidly become a high-profile AI infrastructure stock with a compelling growth narrative. It offers exposure to the surging demand for AI computation, essentially serving as a picks-and-shovels play for the AI boom. For investors, it’s a trade-off between that exciting upside and the execution/valuation risks inherent in a young company pushing its limits. As of late September 2025, the stock’s journey has been exhilarating – and all eyes will be on whether APLD can turn its bold plans into durable shareholder value in the months ahead.

Sources: Financial news and data from Yahoo Finance, MarketBeat, Simply Wall St, Applied Digital investor releases, and other market reports ^[122] ^[123] ^[124] ^[125] ^[126] ^[127] ^[128] ^[129] ^[130] ^[131] ^[132].