Applied Digital (APLD) has been on a solid run, with its stock soaring 88.9% in just the past month. This impressive growth reflects the company’s strategic positioning in rapidly growing industries such as high-performance computing (HPC) and artificial intelligence (AI).

Specializing in next-generation data centers and infrastructure, Applied Digital is poised to capitalize on the rising demand for AI, machine learning (ML), blockchain, and HPC capabilities. Its infrastructure is designed to support the heavy workloads demanded by AI and ML. This alignment with high-growth industries has played a key role in driving the recent momentum behind the stock.

Furthermore, much of the latest excitement surrounding Applied Digital is due to its recently announced 15-year lease agreement with CoreWeave (CRWV), an AI infrastructure company. The deal significantly strengthens Applied Digital’s revenue visibility and long-term growth prospects. Following the announcement, shares of APLD jumped 48.46% on June 2.

Given this positive development and long-term secular trends, analysts remain optimistic about Applied Digital’s future. Applied Digital’s strong financials and continued growth in its high-potential segments will support further upside in its share price. The highest price target for APLD stock is $18, reflecting 82% upside from current price levels.

Applied Digital Unlocks $7 Billion Revenue Potential

Applied Digital has landed a solid deal with CoreWeave that could generate approximately $7 billion in lease revenue over the next 15 years. The agreement centers around Applied Digital’s Ellendale, North Dakota, data center campus, where the company will deliver 250 megawatts (MW) of IT load to support CoreWeave’s HPC and AI infrastructure.

This long-term lease arrangement adds a reliable revenue stream, strengthening Applied Digital’s position as the key infrastructure provider for next-generation digital workloads.

Notably, the Ellendale campus is designed specifically for next-generation workloads with large-scale power capacity, efficient deployment capabilities, and access to low-cost power.

The first phase of the project, a 100 MW facility, is on track to go live in the fourth quarter of 2025. A second building, capable of delivering another 150 MW, is under construction and expected to be operational by mid-2026. Plans for a third facility, which could bring an additional 150 MW online by 2027, are already underway, with CoreWeave holding an option to secure that capacity as demand grows.

As AI continues to grow at an unprecedented pace, such long-term leases put Applied Digital in a solid position to capitalize on the surging demand for digital infrastructure.

What’s Next for Applied Digital (APLD) Stock?

Applied Digital’s prospects remain solid as the company remains well-positioned in an industry that’s experiencing explosive growth. With the ongoing push for digital transformation, demand for data center infrastructure is rapidly expanding. Companies across every sector are accelerating their digital adoption, and this trend is pushing the need for high-performance computing and hosting capabilities to new heights.

This trend positions companies like Applied Digital favorably to benefit from sustained industry tailwinds.

Furthermore, Applied Digital’s partnership with Macquarie Asset Management is a strategic move that will help fund and support the company’s next-generation high-performance data centers. Additionally, financing from Sumitomo Mitsui Bank Corporation provides Applied Digital with further firepower to expand its capacity, enabling it to capitalize on the growing demand for digital infrastructure solutions.

A notable part of APLD’s business supports cryptocurrency mining, a sector that continues to show resilience and solid growth potential. With increasing institutional interest in cryptocurrencies and an improving regulatory climate in the U.S., the adoption of these assets will rise, which will fuel demand for Applied Digital’s services in this area.

Thanks to these growth drivers, Wall Street analysts are bullish about Applied Digital’s prospects. Moreover, the Street high price target, issued by Northland Securities analyst Michael Grondahl, suggests significant upside potential from current levels.

However, investors should take caution. The stock is not cheap. Its price-sales ratio sits at 10.2x, which is on the higher side. Moreover, the company is carrying a significant debt load. As of Feb. 28, 2025, Applied Digital held $261.2 million in cash, but its total debt stood at $689.1 million.

Conclusion

Applied Digital is well-positioned to benefit from significant growth trends in digital infrastructure and crypto. However, investors should consider the company’s high valuation and sizable debt before investing in APLD stock.