Applied Digital

APLD

Market cap $8.14B

Applied Digital (APLD) has transitioned from crypto data centers to a leading AI infrastructure platform, targeting hyperscaler demand for high-density capacity. APLD boasts $36B in contracted lease revenue across five AI Factory campuses, with 1.4 GW critical IT load and diversified, investment-grade tenants. Financing strength is evident: multi-billion dollar project-level debt and revolving credit facilities support rapid expansion, with future refinancing potential.

TeraWulf recently signed a 20-year deal with Anthropic, prompting one analyst to predict that the stock will more than triple from current levels. Applied Digital has an easier path to building neocloud data centers since it does not supply the servers or AI chips.

Applied Digital faces pressure as heavy AI data center expansion, customer concentration and premium valuation cloud its near-term outlook despite strong growth.

Applied Digital receives a Buy rating, driven by robust triple-digit revenue growth and strong future demand signals. APLD is positioned as a significant beneficiary in the data center market, which may still be in its early innings. Despite substantial appreciation and not being the cheapest data center play, I see no structural concerns undermining the bullish thesis.

Applied Digital has successfully pivoted from crypto mining to AI-focused data center operations, securing long-term hyperscaler contracts. APLD boasts $36 billion in contracted lease value over 15 years, with $2 billion annualized NOI and rapid capacity expansion through 2028. Macquarie's potential $5 billion investment and a 97% stake in ChronoScale enhance APLD's growth and asset value, but monetization challenges exist.

Applied Digital's AI data center expansion is backed by long-term leases, but heavy reliance on a few hyperscale customers raises long-term revenue and execution risks.

Shares of TeraWulf (NASDAQ:WULF) are down 8% to $20.41 in Tuesday's midday session, reversing yesterday's rally on the Anthropic mega-deal.

APLD is ramping up AI data center expansion with billions in new financing, as much of its contracted capacity has yet to generate recurring revenues.

The semiconductor rotation and memory stock profit taking puts investors in a bind trying to call the top.

Hyperscaler capex has ballooned to nearly $700 billion, up from roughly $400 billion just three months earlier, according to Applied Digital CEO Wes Cummins.