Applied Digital and CoreWeave: Poised for Explosive Growth in AI Infrastructure

Applied Digital and Nvidia are leading the infrastructure for AI, with Goldman Sachs expecting data centers to consume 165% more power by 2030. Applied Digital is a leader in designing and building data centers, with a small stake owned by Nvidia. The company has secured a $11 billion lease agreement with AI hyperscaler CoreWeave and aims to reach $1 billion in annual operating income in 3-5 years, potentially doubling its current enterprise value.

The artificial intelligence (AI) revolution is driving an unprecedented demand for powerful data centers and advanced AI chips. According to Goldman Sachs, data centers are expected to consume 165% more power by 2030, presenting a significant opportunity for companies specializing in AI infrastructure. Among the leaders in this field are Applied Digital and Nvidia, which are positioned to benefit from this growing need.

Applied Digital: Leading Data Center Design and Construction

Applied Digital is a pioneer in designing and building data centers. With a focus on AI workloads, the company has secured a $11 billion lease agreement with AI hyperscaler CoreWeave, which includes two 15-year leases totaling approximately 400 megawatts (MW) [1]. The Polaris Forge 1 Campus in North Dakota, designed to scale up to 1 gigawatt, will utilize renewable power and the cool climate to prioritize sustainability [2]. This facility is expected to be fully operational by 2027, contributing to the region's growing digital economy.

Nvidia's Strategic Stake in Applied Digital

Nvidia, a leading AI chip manufacturer, owns a small stake in Applied Digital. The two companies have collaborated to design data centers around Nvidia's hardware, ensuring that Applied Digital's facilities are equipped with cutting-edge technology. This strategic partnership positions Applied Digital to leverage Nvidia's expertise in AI hardware, further enhancing its offerings.

Growth Potential and Financial Outlook

Applied Digital aims to reach $1 billion in annual operating income within the next three to five years, which could potentially double its current enterprise value [1]. The company's recent lease agreement with CoreWeave brings its total anticipated contracted lease revenue to approximately $11 billion, indicating substantial future earnings. Despite a current enterprise value of $4.9 billion, the stock is trading at 17 times its forward operating profit, suggesting it is undervalued given the company's growth prospects.

Competitive Landscape and Future Prospects

While Applied Digital faces competition from other data center builders, its strategic partnerships and growing demand for AI infrastructure position it favorably. The company's ability to execute and secure additional lease agreements with major hyperscalers could significantly boost its stock price in the next three years. As the need for more computing and power capacity grows, Applied Digital is well-positioned to supply these resources, making it a compelling investment for long-term investors.

Conclusion

The AI infrastructure market is poised for explosive growth, and companies like Applied Digital and Nvidia are at the forefront of this trend. With strategic partnerships, substantial lease agreements, and a focus on sustainability, Applied Digital is well-equipped to capitalize on the growing demand for AI workloads. Investors should closely monitor the company's progress and consider its potential for significant growth in the coming years.

References
[1] https://www.fool.com/investing/2025/09/02/poised-for-explosive-growth-2-ai-stocks-that-could/
[2] https://finance.yahoo.com/news/ai-chips-today-applied-digital-113724703.html
[3] https://www.marketscreener.com/news/applied-digital-finalizes-additional-150mw-lease-with-coreweave-in-north-dakota-ce7c50ddda8aff20