Achieving AI Infrastructure Dominance: Applied Digital's $11 Billion Pivot

Applied Digital Corp's surge in bullish bets signals a new era for the company as it pivots from hosting for the cryptocurrency mining industry to becoming an AI infrastructure powerhouse. The company's $11 billion deal with CoreWeave, a prominent private AI Hyperscaler, validates its new identity and provides revenue visibility. Investors are re-evaluating Applied Digital's worth based on this contract, shifting focus from strategy to execution. The company's management is addressing investor concerns through decisive steps to de-risk its ambitious construction plan and ensure contracted revenue becomes a reality.

Applied Digital Corp (NASDAQ: APLD) has seen a significant surge in its stock price, driven by optimism surrounding its expanded collaboration with AI infrastructure giant CoreWeave Inc. (NASDAQ: CRWV). The company's stock jumped 11.42% on Monday, reflecting investor confidence in the potential of a billion-dollar revenue opportunity from this partnership [1].

The expanded contract involves Applied Digital adding 150 MW of critical IT load capacity to the existing 250 MW, effectively doubling the total capacity to 400 MW. The first 100 MW facility is scheduled to be operational in the fourth quarter of 2025, followed by a 150 MW capacity in mid-2026, and the third 150 MW in 2027 [1]. This deal is expected to bring in an additional $4 billion in revenues, raising the total to $11 billion.

In addition to the revenue projections, Applied Digital Corp reported a narrowing of its net loss attributable to shareholders in the fourth quarter ending May 2025 by 16 percent to $53.9 million from $64.7 million in the same period last year. Total revenues increased by 41 percent to $38 million from $26.9 million year-on-year [1].

The recent surge in Applied Digital's stock price coincides with major partnerships and a significant leasing deal with CoreWeave Inc. (NASDAQ: CRWV), which could be worth USD 7 billion. These developments bolstered investor confidence amidst an optimistic market backdrop where tech stocks have generally thrived, buoyed by strong earnings from industry giants like Microsoft and Meta [1].

Over the past five years, Applied Digital's shares have experienced a very large total return of 8258.40%, a remarkable increase highlighting strong shareholder value creation. The stock's 89% quarterly surge aligns with analyst projections of a future price target of US$14.61, suggesting a bullish outlook. However, the current share price of US$10.03 results in a notable discount to this target, which may underscore potential growth opportunities and underlying risks that investors might weigh [1].

The article by Simply Wall St is general in nature and provides commentary based on historical data and analyst forecasts using an unbiased methodology. It is not intended to be financial advice and does not constitute a recommendation to buy or sell any stock. The analysis may not factor in the latest price-sensitive company announcements or qualitative material [1].

References:
[1] https://www.ainvest.com/news/applied-digital-share-price-rises-11-4-optimism-expanded-coreweave-deal-2508/
[2] https://seekingalpha.com/article/4808288-core-scientific-coreweave-stock-merger-looking-for-trade
[3] https://www.ainvest.com/news/applied-digital-corp-sees-31-surge-expanded-multi-billion-contract-coreweave-2508/