Shares of Applied Digital Corporation (NASDAQ: APLD) experienced a significant rally Friday morning, jumping more than 8% on strong trading volume. The stock price reached $11.85, an increase of $0.94, as investors show renewed confidence in the company’s strategic direction.
The digital infrastructure company, which is pivoting towards high-performance computing (HPC) and AI-focused data centers, has seen its stock gain momentum. This surge is part of a larger upward trend for APLD, which has seen its shares climb approximately 17% over the past week. Today’s trading session saw the stock open at $11.47, well above the previous day’s close of $10.91, and hit a high of $12.15.
The positive momentum appears to be driven by continued investor optimism about the company’s focus on the booming artificial intelligence industry.[1] This shift in strategy has been validated by major agreements, including two 15-year leases with specialized cloud provider CoreWeave. These contracts are for 250 megawatts of capacity at Applied Digital’s data center campus in Ellendale, North Dakota, and are projected to generate approximately $7 billion in revenue over the 15-year term.
Analysts have a largely positive outlook on Applied Digital, with a consensus “Strong Buy” rating. The average 12-month price target is around $12.64, suggesting potential for further upside from the current price. Recent analyst ratings have been overwhelmingly positive, with numerous firms issuing “Buy” or equivalent ratings.
The company is scheduled to host a conference call on July 30, 2025, to discuss its fiscal fourth-quarter and full-year financial and operational results, an event that investors will be watching closely.
Should You Buy or Sell APLD Stock Today?
For the Bullish Investor:
Investors bullish on APLD point to its strategic pivot to the high-growth AI infrastructure market. The long-term contracts with CoreWeave provide a stable and significant revenue stream, underpinning the company’s growth narrative. Furthermore, the strong consensus “Buy” rating from Wall Street analysts and a price target suggesting room for growth add to the positive sentiment. The increasing demand for AI-focused data centers from tech giants also provides a strong tailwind for the company.
For the Cautious Investor:
On the other hand, cautious investors will note the stock’s high volatility, as indicated by its beta of 5.87. The company currently has a negative earnings per share (EPS) of -1.47, and its most recent quarterly earnings report missed analyst expectations. The stock has seen significant price swings, and some analysts express concern over customer concentration and the execution risks associated with its rapid expansion. While the long-term outlook may be promising, the high volatility and current lack of profitability present notable risks.
Opinion
Applied Digital’s aggressive and strategic shift to cater to the AI revolution is a compelling narrative that has rightly captured investor attention. The landmark deal with CoreWeave is a significant validator of its business model. However, the stock is not for the faint of heart. Its high beta signifies a risk level that is well above the market average. While the potential for high rewards exists, so does the risk of significant downturns. The upcoming earnings call on July 30th will be a critical event, providing more clarity on the company’s operational execution and financial health. Investors should weigh the high-growth potential against the inherent volatility and execution risks before making a decision.
FAQs
What does Applied Digital Corporation do?
Applied Digital operates and develops scalable digital infrastructure solutions, focusing on high-performance computing (HPC) workloads for AI, blockchain, and other cloud services.
Why is APLD stock so volatile?
APLD’s stock is highly volatile due to several factors, including its transition to the high-growth but competitive AI infrastructure market, its history as a crypto-related company, and the significant capital investment required for its expansion plans. Its stock has experienced 107 moves greater than 5% over the last year.
What is the analyst consensus on APLD stock?
The consensus among Wall Street analysts is a “Strong Buy” or “Buy”. Out of 13 analysts, 11 have issued buy ratings, one has a strong buy rating, and one has a hold rating. The average 12-month price target is around $12.64 to $12.73.
What are the key drivers for APLD’s future growth?
The primary driver for APLD’s growth is the increasing demand for high-performance computing data centers fueled by the expansion of artificial intelligence. Its long-term contracts, particularly with CoreWeave, are expected to provide a stable revenue base for future expansion.
