Applied Digital Scores $7 Billion Deal with CoreWeave, Analysts Weigh In on Explosive Growth Potential

Applied Digital has a $7 billion deal with CoreWeave, marking a significant shift into AI infrastructure. Backed by Nvidia and major financial institutions, APLD may be poised for explosive growth. However, investors should be cautious and carefully consider the company's strategy, financials, and market position before investing.

In a significant move, Applied Digital (APLD) has secured a $7 billion deal with CoreWeave (CRWV), marking a substantial pivot into the burgeoning AI infrastructure sector. The agreement, backed by Nvidia and major financial institutions, positions APLD for potentially explosive growth. However, investors should carefully consider the company's strategy, financials, and market position before making investment decisions.

Strategic Pivot and Growth Potential

Applied Digital has transitioned from legacy models, such as crypto mining and generalized hosting, to focus on high-performance computing (HPC) and AI-optimized data centers. This strategic pivot is evident in the company's third-quarter fiscal 2025 revenues, which reached $52.9 million, a significant year-over-year increase [1]. APLD's AI cloud services business contributed materially to this growth, reflecting the company's diversification strategy.

The deal with CoreWeave underscores APLD's commitment to building liquid-cooled, high-density data centers optimized for AI workloads. These facilities are designed to attract clients requiring compute-heavy infrastructure, including those aligned with NVIDIA GPU deployments. APLD's infrastructure pipeline includes additional AI-focused campuses that could significantly scale revenues in fiscal 2026 and beyond [1].

Financial Performance and Market Position

CoreWeave's exceptional first-quarter 2025 performance, with revenues reaching $438 million, indicates a 4x increase year over year. This growth was driven by explosive demand for AI workloads and accelerated compute, primarily powered by CoreWeave's differentiated infrastructure offerings [1]. The company's expansion strategy is paying off, with 33 purpose-built AI data centers across the United States and Europe, and industry-leading GPU availability [1].

APLD's forward sales multiple of 8.37 is quite above its median of 1.53X over the last three years, indicating high growth expectations and improving profitability [1]. CoreWeave's forward sales multiple sits at 8.11, reflecting its strong market position and growth prospects [1].

Investment Considerations

While both companies are capitalizing on the AI infrastructure boom, APLD presents a more compelling opportunity for investors seeking early-stage growth with significant upside potential. Unlike CoreWeave, which has already scaled and may face valuation saturation, APLD is in the early innings of its AI transition [1].

APLD's disciplined capex strategy, strong revenue visibility through long-term contracts, and growing customer base signal a favorable risk-reward profile. Investors should carefully consider these factors before making investment decisions.

Conclusion

Applied Digital's $7 billion deal with CoreWeave marks a strategic shift into AI infrastructure, backed by Nvidia and major financial institutions. While the company presents compelling growth prospects, investors should carefully evaluate its strategy, financials, and market position before making investment decisions. APLD's disciplined approach and focus on AI-optimized data centers position it well for the AI boom.

References

[1] https://finance.yahoo.com/news/applied-digital-vs-coreweave-ai-123000321.html