Applied Digital's ABB Partnership: Revolutionizing AI Infrastructure and Driving Growth

The race to build next-generation data centers capable of supporting artificial intelligence (AI), blockchain, and high-performance computing (HPC) has intensified, and Applied Digital (NASDAQ: APLD) is positioning itself as a leader through its strategic partnership with ABB. This collaboration, centered on ABB's groundbreaking HiPerGuard Medium Voltage Static UPS technology, is unlocking unprecedented energy efficiency and scalability in data center design. Combined with a $7 billion lease agreement and a 400 MW greenfield campus, Applied Digital is primed to capitalize on soaring demand for advanced infrastructure—while trading at a valuation that significantly lags its growth potential.

The Transformative Power of Medium Voltage UPS Technology

ABB's HiPerGuard technology is the linchpin of this partnership. By adopting medium-voltage power architecture (MV), Applied Digital's North Dakota data center campus can operate at 480V instead of traditional 48V systems, reducing energy losses by up to 30% and enabling seamless scalability. The design allows incremental 25 MW expansions, a stark contrast to the fixed, rigid frameworks of legacy data centers. Todd Gale, Applied Digital's Chief Development Officer, calls this “a paradigm shift for AI infrastructure,” as it reduces installation complexity, heat generation, and long-term operational costs.

The tangible results are already visible. Orders from the ABB partnership were booked in Q4 2024 and Q1 2025, signaling strong demand for this technology. While financial terms remain undisclosed, the strategic value is undeniable: Applied Digital is now capable of delivering hyperscale data centers at a fraction of the cost and time of competitors.

The CoreWeave Catalyst: A $7 Billion Growth Engine

The partnership's momentum is further fueled by a landmark 15-year lease with CoreWeave, a cloud infrastructure provider. This $7 billion agreement secures 250 MW of the 400 MW North Dakota campus, with an option to expand to full capacity. The deal underscores two critical advantages:

1. Revenue Visibility: With a 15-year term and a megawatt expansion option, Applied Digital has locked in predictable cash flows while retaining upside as CoreWeave scales.
2. Market Validation: Large-scale cloud providers are prioritizing energy-efficient, modular infrastructure—exactly what ABB's tech delivers. This positions Applied Digital as the go-to partner for firms needing AI-ready data centers.

Outperforming the Market: Applied Digital's Stock Surge and Analyst Backing

Applied Digital's stock has surged 70% year-to-date and 141% over the past month, far outpacing the S&P 500's “in-line with historical norms” performance. Analysts have taken notice: all 10 covering APLD rate it a “Strong Buy” or “Moderate Buy,” with a mean price target of $13.25—43% above its June 6 close of $9.25. The CoreWeave deal alone justifies optimism, but the broader story is even stronger.

Consider Applied Digital's Q3 2024 results:
- Revenue rose 22.1%, driven by a 220% jump in Cloud Services to $17.8 million, offsetting a 7% dip in Data Center Hosting.
- Adjusted EBITDA improved to $10 million, compared to a $1.3 million loss a year prior.

These metrics suggest a company transitioning from a capital-heavy builder to a high-margin service provider—a shift accelerated by the ABB partnership's operational efficiencies.

Why Applied Digital Remains Undervalued and Underrated

Despite its progress, Applied Digital's valuation is still conservative. At a $9.94 analyst target, the stock offers 8% upside, but this understates its potential:
- Undisclosed Upside: The ABB partnership's financial details remain opaque, but the booked orders and CoreWeave deal imply a pipeline far exceeding current valuations.
- AI Infrastructure Tailwinds: The global AI compute market is projected to grow at a 23% CAGR, and Applied Digital's modular, energy-efficient model is uniquely positioned to capture this demand.
- Competitive Advantages: ABB's global supply chain and engineering expertise reduce Applied Digital's execution risk, while the 400 MW campus creates a moat against competitors.

Risks and Considerations

• Execution Risk: Scaling a 400 MW campus requires flawless project management, though ABB's involvement mitigates this.
• Market Volatility: Applied Digital's stock has shown high beta, as seen in its 35% post-Q3 drop. Investors should consider stop-losses or dollar-cost averaging.

Final Analysis: A Compelling Buy at Current Levels

Applied Digital is not just a beneficiary of AI's rise—it's an enabler. Its ABB-backed technology and CoreWeave partnership create a rare combination of near-term revenue visibility and long-term strategic advantage. With analysts targeting $13.25 and the stock trading at $9.25, the risk-reward profile is compelling. For investors willing to look beyond short-term volatility, Applied Digital offers a chance to own a cornerstone of the next-generation infrastructure boom.

Recommendation: Buy Applied Digital (APLD) with a 12-month target of $13.25. Monitor for updates on the North Dakota campus progress and additional partnership announcements.