Applied Digital's Stock Volatility Masks Significant Growth Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 23 2026
0mins
Should l Buy APLD?
Source: Fool
- Stock Price Analysis: Applied Digital's stock has surged nearly 300% over the past year, yet it has experienced volatility since mid-October, currently trading 13% below its 52-week high, indicating market caution regarding its future performance.
- Surge in Data Center Demand: According to McKinsey, demand for AI-specific workloads in data centers is expected to increase 3.5 times from 2025 to 2030, with an anticipated addition of 124 gigawatts of AI data center capacity, indicating robust demand for Applied Digital's services.
- Long-Term Lease Contracts: Applied Digital has signed long-term lease agreements for two data center projects in North Dakota, having leased out 600 megawatts of capacity, which is projected to generate $16 billion in lease revenue over the next 15 years, showcasing the sustainability of its business model.
- Expansion Plans: The company aims to increase its overall data center capacity to 5 gigawatts over the next five years and has secured agreements for 4.3 gigawatts of capacity with utility companies, indicating significant growth potential ahead.
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Analyst Views on APLD
Wall Street analysts forecast APLD stock price to rise
10 Analyst Rating
10 Buy
0 Hold
0 Sell
Strong Buy
Current: 24.490
Low
36.00
Averages
52.22
High
99.00
Current: 24.490
Low
36.00
Averages
52.22
High
99.00
About APLD
Applied Digital Corporation is a designer, builder, and operator of sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads. The Company’s segments include data center hosting (Data Center Hosting Business) and high-performance compute hosting (HPC Hosting Business). The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. Customer-owned hardware is installed in its facilities, and the Company provides operational and maintenance services for a fixed fee. Its facilities include a 106 megawatt (MW) facility in Jamestown and a 180 MW facility in Ellendale, North Dakota. The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and infrastructures to provide services to customers. Its HPC data center is located at its Polaris Forge 1 campus with 100 MW capacity.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Applied Digital Adds $2.15 Billion Debt Amid Rising Risks
- Debt Surge: Applied Digital has added $2.15 billion in new debt at a 6.75% interest rate, bringing its total debt to approximately $5 billion, a significant increase from just $468 million a year ago, indicating heightened financial vulnerability under pressure.
- Revenue Pipeline Dependency: The company boasts a $16 billion pipeline of contracted lease revenue, with $11 billion sourced from CoreWeave, creating a precarious financial situation for Applied Digital, especially as CoreWeave itself carries over $21 billion in debt.
- Profitability Concerns: CoreWeave reported a $1.2 billion loss last year, and while its revenue is growing rapidly, its debt is escalating even faster, raising alarms for investors regarding its potential impact on Applied Digital, particularly in a deteriorating macroeconomic environment.
- Reliance on OpenAI: CoreWeave's financial health is heavily reliant on OpenAI's ability to secure funding, with OpenAI projected to face $14 billion in losses by 2026 and total losses reaching $115 billion, casting significant uncertainty over Applied Digital's future prospects.
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Surge in Demand for AI Data Centers Amid Neocloud Boom
- Surging Market Demand: The rapid advancement of artificial intelligence has led to a dramatic increase in demand for dedicated data centers, particularly GPU-powered neoclouds, indicating a supercycle where demand significantly exceeds supply.
- Massive Revenue Potential: Applied Digital is constructing two data centers in North Dakota with a combined capacity of 700 megawatts (MW), of which 600 MW has already been leased, potentially generating $16 billion in lease revenue.
- Long-Term Growth Plans: The company aims to build 4.3 gigawatts (GW) of AI data centers in the future, leveraging controlled land and power agreements with utility companies to ensure sustained customer demand.
- Optimistic Profit Expectations: Management anticipates surpassing $1 billion in net operating income by 2026, and with the projected growth in AI data center demand over the next decade, Applied Digital's stock is poised for further appreciation.
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- AI Sector Pullback: The Global X Artificial Intelligence & Technology ETF has declined nearly 9% in 2026, indicating a waning enthusiasm for AI technology; however, this pullback presents a prime opportunity for investors to buy AI stocks like Nvidia and Applied Digital.
- Productivity Gains: Research from Morgan Stanley reveals that companies adopting AI across sectors such as transportation, healthcare, automotive, retail, and real estate are experiencing an average productivity increase of 11.5%, demonstrating the tangible benefits of AI implementation.
- Nvidia's Growth Potential: Nvidia reported a 73% revenue increase in fiscal 2026, reaching $215.9 billion, with guidance suggesting a 77% year-over-year revenue jump for the current quarter, indicating robust demand for its chips and sustainable growth prospects.
- Applied Digital's Expansion Plans: Applied Digital has signed $16 billion in 15-year lease contracts for two data centers and is in advanced talks for three additional campuses, which could significantly boost revenue; analysts have set a 12-month price target of $43.50, suggesting a potential 69% upside.
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Applied Digital Amends Lease Agreements with CoreWeave for Data Centers
- Lease Amendments: Applied Digital has amended two lease agreements with CoreWeave regarding the Polaris Forge 1 data centers in Ellendale, North Dakota, suspending the ELN-02 lease and establishing new leases with CoreWeave Compute Acquisition Company, indicating a strategic shift in data center operations.
- Enhanced Credit Support: CoreWeave provided an Unconditional Springing Guaranty of Payment and Performance to Applied Digital, along with a $50 million letter of credit to secure obligations under the ELN-02 lease, which enhances CoreWeave's credit ratings and is expected to positively impact holders of Applied Digital's 9.250% notes due 2030.
- Revenue Projections: Under the new lease terms, Applied Digital will deliver 250 MW of capacity to CoreWeave, projected to generate approximately $7 billion in revenue over 15 years, further solidifying its position in the high-performance computing market.
- Stock Price Reaction: Applied Digital's shares surged 15% by Tuesday's close and gained an additional 3.6% in pre-market trading on Wednesday, reflecting positive market sentiment regarding the lease amendments, while CoreWeave's stock also rose by 12%.
See More
Trump Announces End to Military Campaign in Iran
- Military Campaign Conclusion: President Trump announced that the U.S. would end its military campaign in Iran within two to three weeks, raising hopes for a potential easing of oil prices, which surged nearly 60% last month, thereby alleviating energy cost pressures across various industries.
- Market Surge: The S&P 500 index gained 2.9% on Tuesday, marking its sharpest increase in over 10 months, reflecting investor optimism about future economic conditions, particularly in light of the potential decline in energy prices.
- Data Center Stocks Rally: Following Trump's announcement, Applied Digital's shares rose 15.5%, while IREN's shares increased by 8.4%, indicating heightened market confidence in the profitability of data center operators as energy costs are expected to decrease.
- Retail Investor Sentiment Improves: After a 24.6% decline in the month leading up to Monday, sentiment for Applied Digital shifted to 'extremely bullish', suggesting a recovery in market confidence regarding its future performance, especially with the prospect of falling oil prices.
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- Analyst Price Target: Analysts covering APLD stock have set a 12-month average price target of $45.27, indicating an upside potential of approximately 120% from its closing price of $20.54, reflecting a positive market outlook.
- Rating Maintained: Roth Capital maintained a ‘Buy’ rating on APLD shares last month with a price target of $58, despite Nvidia's exit from the company, suggesting analysts remain confident in the company's fundamentals.
- Earnings Expectations: The data center company is expected to report its Q3 2026 earnings on April 8, with Wall Street forecasting revenue of $78.47 million for the quarter, representing a year-on-year increase of about 48%, indicating strong growth momentum.
- Market Sentiment Shift: APLD stock saw a significant spike in message volume on Stocktwits, increasing by about 63% in 24 hours, with user sentiment shifting from ‘neutral’ to ‘bullish’, reflecting growing investor confidence in the stock.
See More
Applied Digital Adds $2.15 Billion Debt Amid Rising Risks
- Debt Surge: Applied Digital has added $2.15 billion in new debt at a 6.75% interest rate, bringing its total debt to approximately $5 billion, a significant increase from just $468 million a year ago, indicating heightened financial vulnerability under pressure.
- Revenue Pipeline Dependency: The company boasts a $16 billion pipeline of contracted lease revenue, with $11 billion sourced from CoreWeave, creating a precarious financial situation for Applied Digital, especially as CoreWeave itself carries over $21 billion in debt.
- Profitability Concerns: CoreWeave reported a $1.2 billion loss last year, and while its revenue is growing rapidly, its debt is escalating even faster, raising alarms for investors regarding its potential impact on Applied Digital, particularly in a deteriorating macroeconomic environment.
- Reliance on OpenAI: CoreWeave's financial health is heavily reliant on OpenAI's ability to secure funding, with OpenAI projected to face $14 billion in losses by 2026 and total losses reaching $115 billion, casting significant uncertainty over Applied Digital's future prospects.
See More
Surge in Demand for AI Data Centers Amid Neocloud Boom
- Surging Market Demand: The rapid advancement of artificial intelligence has led to a dramatic increase in demand for dedicated data centers, particularly GPU-powered neoclouds, indicating a supercycle where demand significantly exceeds supply.
- Massive Revenue Potential: Applied Digital is constructing two data centers in North Dakota with a combined capacity of 700 megawatts (MW), of which 600 MW has already been leased, potentially generating $16 billion in lease revenue.
- Long-Term Growth Plans: The company aims to build 4.3 gigawatts (GW) of AI data centers in the future, leveraging controlled land and power agreements with utility companies to ensure sustained customer demand.
- Optimistic Profit Expectations: Management anticipates surpassing $1 billion in net operating income by 2026, and with the projected growth in AI data center demand over the next decade, Applied Digital's stock is poised for further appreciation.
See More
Investment Opportunities Amid AI Stock Market Pullback
- AI Sector Pullback: The Global X Artificial Intelligence & Technology ETF has declined nearly 9% in 2026, indicating a waning enthusiasm for AI technology; however, this pullback presents a prime opportunity for investors to buy AI stocks like Nvidia and Applied Digital.
- Productivity Gains: Research from Morgan Stanley reveals that companies adopting AI across sectors such as transportation, healthcare, automotive, retail, and real estate are experiencing an average productivity increase of 11.5%, demonstrating the tangible benefits of AI implementation.
- Nvidia's Growth Potential: Nvidia reported a 73% revenue increase in fiscal 2026, reaching $215.9 billion, with guidance suggesting a 77% year-over-year revenue jump for the current quarter, indicating robust demand for its chips and sustainable growth prospects.
- Applied Digital's Expansion Plans: Applied Digital has signed $16 billion in 15-year lease contracts for two data centers and is in advanced talks for three additional campuses, which could significantly boost revenue; analysts have set a 12-month price target of $43.50, suggesting a potential 69% upside.
See More
Applied Digital Amends Lease Agreements with CoreWeave for Data Centers
- Lease Amendments: Applied Digital has amended two lease agreements with CoreWeave regarding the Polaris Forge 1 data centers in Ellendale, North Dakota, suspending the ELN-02 lease and establishing new leases with CoreWeave Compute Acquisition Company, indicating a strategic shift in data center operations.
- Enhanced Credit Support: CoreWeave provided an Unconditional Springing Guaranty of Payment and Performance to Applied Digital, along with a $50 million letter of credit to secure obligations under the ELN-02 lease, which enhances CoreWeave's credit ratings and is expected to positively impact holders of Applied Digital's 9.250% notes due 2030.
- Revenue Projections: Under the new lease terms, Applied Digital will deliver 250 MW of capacity to CoreWeave, projected to generate approximately $7 billion in revenue over 15 years, further solidifying its position in the high-performance computing market.
- Stock Price Reaction: Applied Digital's shares surged 15% by Tuesday's close and gained an additional 3.6% in pre-market trading on Wednesday, reflecting positive market sentiment regarding the lease amendments, while CoreWeave's stock also rose by 12%.
See More
Trump Announces End to Military Campaign in Iran
- Military Campaign Conclusion: President Trump announced that the U.S. would end its military campaign in Iran within two to three weeks, raising hopes for a potential easing of oil prices, which surged nearly 60% last month, thereby alleviating energy cost pressures across various industries.
- Market Surge: The S&P 500 index gained 2.9% on Tuesday, marking its sharpest increase in over 10 months, reflecting investor optimism about future economic conditions, particularly in light of the potential decline in energy prices.
- Data Center Stocks Rally: Following Trump's announcement, Applied Digital's shares rose 15.5%, while IREN's shares increased by 8.4%, indicating heightened market confidence in the profitability of data center operators as energy costs are expected to decrease.
- Retail Investor Sentiment Improves: After a 24.6% decline in the month leading up to Monday, sentiment for Applied Digital shifted to 'extremely bullish', suggesting a recovery in market confidence regarding its future performance, especially with the prospect of falling oil prices.
See More
APL Digital Stock Price Target Raised to $45.27
- Analyst Price Target: Analysts covering APLD stock have set a 12-month average price target of $45.27, indicating an upside potential of approximately 120% from its closing price of $20.54, reflecting a positive market outlook.
- Rating Maintained: Roth Capital maintained a ‘Buy’ rating on APLD shares last month with a price target of $58, despite Nvidia's exit from the company, suggesting analysts remain confident in the company's fundamentals.
- Earnings Expectations: The data center company is expected to report its Q3 2026 earnings on April 8, with Wall Street forecasting revenue of $78.47 million for the quarter, representing a year-on-year increase of about 48%, indicating strong growth momentum.
- Market Sentiment Shift: APLD stock saw a significant spike in message volume on Stocktwits, increasing by about 63% in 24 hours, with user sentiment shifting from ‘neutral’ to ‘bullish’, reflecting growing investor confidence in the stock.
See More
