The artificial intelligence (AI) boom isn’t just a passing trend. It’s becoming a defining force in the tech world, with major players ramping up investments to build the infrastructure needed to support it. Take Amazon (AMZN), for example. The e-commerce and tech powerhouse recently announced plans to pour a whopping $10 billion into new data centers in North Carolina as part of its broader push to scale up its AI capabilities. 

In fact, this strategic move is part of a massive capital expenditure plan of up to $100 billion for the year, with a significant portion earmarked for AI-related projects. Like Microsoft (MSFT), Google (GOOGL), and OpenAI, Amazon is in a high-stakes race to expand its capacity for AI workloads, with CEO Andy Jassy describing generative AI as a “once-in-a-lifetime type of business opportunity.” 

That being said, as Big Tech pours billions into building out AI-ready infrastructure, the spotlight is turning to the data centers powering this seismic shift. And that’s where names like Applied Digital (APLD) come into the picture. While the company may not grab headlines as often as the tech giants, it’s one of the rising players positioned to capitalize on the growing demand for high-performance, AI-optimized facilities.

About Applied Digital Stock

Applied Digital Corporation (APLD) designs and operates data centers built for the next era of computing. Its purpose-built infrastructure is tailored to handle power-hungry workloads, such as AI, machine learning, blockchain, and high-performance computing (HPC). With experience in hyperscale environments and access to strong power resources, the company is helping to meet the rising demand for accelerated, scalable, and secure compute capacity.

With a market cap hovering around $3 billion, Applied Digital has been on a remarkable run, up nearly 88% so far in 2025, handily outperforming the broader S&P 500 Index’s ($SPX) 2.1% gain. In just the past month alone, the stock has skyrocketed an incredible 160%. 

Much of the latest excitement surrounding Applied Digital can be traced to its recently announced 15-year lease agreement with CoreWeave (CRWV), an AI infrastructure company. The long-term deal significantly boosts Applied Digital’s revenue visibility and strengthens its position in the rapidly growing AI data center space. Following the announcement, shares of APLD spiked 48.5% on June 2.

While Applied Digital’s rally in 2025 has been impressive, its lofty valuation is hard to ignore. The stock is currently trading at 13+ times sales, which is well above the sector median of 2.87x. 

Applied Digital’s Q3 Earnings Snapshot

Applied Digital’s fiscal 2025 third quarter earnings reported on April 14 sparked a sharp market response, with the stock tumbling more than 35% in the following trading session after missing Wall Street’s expectations. Although revenue showed healthy growth, rising 22% year-over-year to $52.9 million, fueled primarily by strong gains in its cloud services segment, it fell noticeably short of the $62.9 million analysts had forecasted. 

The company reported a narrower loss of $0.16 per share for the quarter, a notable improvement from the $0.52 loss per share a year ago. However, this still came up short of analyst expectations, which had anticipated a smaller loss of just $0.11 per share. 

Breaking down the numbers further, Applied Digital’s Data Center Hosting segment generated $35.2 million in revenue, down 7% from $37.8 million in the same quarter last year. The real highlight, however, came from Applied Digital’s Cloud Services segment, which saw revenue soar a staggering 220% year-over-year to $17.8 million, driven by booming demand for HPC fueled by AI and machine learning workloads. 

As the appetite for data center capacity continues to grow, the company signaled plans for a strategic shift toward becoming a pure-play data center REIT, aiming to sharpen its operational focus and unlock greater long-term value. Central to this vision is the planned separation of its Cloud Services business, a move designed to spotlight its core infrastructure strengths while providing investors with a clearer picture of its distinct growth opportunities.

Analysts following Applied Digital anticipate a steady improvement in the company’s profitability, forecasting a 24.4% reduction in losses for fiscal 2025, followed by a sharp 72.7% turnaround in fiscal 2026.

What Do Analysts Expect for Applied Digital Stock?

While the company’s recent earnings may have dampened investor sentiment, analysts aren’t backing down from their bullish stance. In fact, on June 4, shares of Applied Digital exploded over 29% after B. Riley reiterated its “Buy” rating and delivered a major vote of confidence by dramatically lifting its price target from $8 to $15 per share. 

The upgrade came on the heels of Applied Digital’s announcement of its contract with CoreWeave, signaling stronger long-term prospects and reinforcing the company’s positioning in the fast-growing AI infrastructure space.

Overall, Wall Street remains largely bullish on APLD stock, with a consensus rating of “Strong Buy”. Of the 10 analysts offering recommendations, nine give it a solid “Strong Buy,” and the remaining one gives a “Moderate Buy.” While the stock currently trades higher than its average analyst price target of $13.25, the Street-high price target for the stock is $18.

Key Takeaways

The escalating AI boom is driving massive capital expenditures from tech giants like Amazon, shifting the focus to specialized data center infrastructure. Applied Digital (APLD), though less publicized, is emerging as a significant player in this space, offering purpose-built facilities for power-intensive AI and HPC workloads. Despite a recent stock surge fueled by a major lease agreement with CoreWeave and a generally bullish analyst sentiment (with a "Strong Buy" consensus), APLD's lofty higher than 13x sales valuation and mixed Q3 earnings (missing revenue but narrowing losses) present a complex picture. As the company eyes a strategic shift to a pure-play data center REIT, its ability to capitalize on AI demand and achieve forecasted profitability will be key to justifying its premium valuation and realizing further upside potential.