Applied Digital Soars 4.6% on AI Infrastructure Breakthrough—What’s Fueling This Surge?

Summary
• Applied Digital (APLD) surges 4.6% to $35.92, hitting an intraday high of $37.17
• Company announces $11 billion AI data center lease expansion with CoreWeave
• 52-week high of $40.20 remains within striking distance as turnover jumps 10.5%

Applied Digital’s stock is trading at its strongest level in months, driven by a strategic expansion of its AI infrastructure partnerships and robust Q1 results. With a 344% year-to-date rally and a dynamic PE of -135.7, the stock’s volatility and growth potential are drawing intense market attention. The recent 16% post-earnings pop has ignited speculation about whether this is a sustainable breakout or a short-term frenzy.

AI Infrastructure Expansion Ignites Earnings Optimism
Applied Digital’s 4.6% intraday surge is directly tied to its $11 billion AI data center lease agreement expansion with CoreWeave, announced alongside Q1 results. The company’s 84% revenue growth to $64.2 million—well above the $50 million estimate—underscores its strategic position in the AI infrastructure boom. CEO Wes Cummins’ emphasis on serving as the 'modern-day picks and shovels' for AI deployment, coupled with a 150 MW capacity expansion at Polaris Forge 1, has redefined investor expectations. The stock’s 30% intraday peak reflects optimism about its 600 MW total leased capacity and $3 billion Polaris Forge 2 project, which could drive revenue growth through 2027.

Data Processing Sector Volatile as Equinix Drags
The Data Processing & Outsourced Services sector is mixed, with Equinix (EQIX), the sector leader, down 2.13% amid concerns over hyperscaler pricing pressures. While APLD’s AI-focused infrastructure model diverges from traditional colocation providers, its 4.6% gain contrasts sharply with EQIX’s decline. This divergence highlights APLD’s unique positioning in the AI-driven data center niche, where demand for high-power capacity is outpacing traditional colocation needs. However, sector-wide volatility suggests investors remain cautious about macroeconomic risks to capex spending.

Options Playbook: Leveraging APLD’s Volatility with Gamma-Driven Calls
• 200-day MA: $12.17 (far below) | RSI: 64.3 (neutral) | MACD: 3.23 (bullish) | Bollinger Upper: $39.85 (key resistance)
• Short-term bearish trend vs. long-term bullish bias creates asymmetric setup for call options
• APLD20251107C34 (Call, $34 strike, Nov 7 expiry): IV 130.28% (high), Delta 0.639 (moderate), Gamma 0.046 (responsive), Turnover $343k (liquid). A 5% upside to $37.72 would yield max payoff of $3.72/share, or 110% return on premium.
• APLD20251107C35 (Call, $35 strike, Nov 7 expiry): IV 123.09% (mid-range), Delta 0.591 (balanced), Gamma 0.051 (high sensitivity), Turnover $384k (liquid). A 5% move to $37.72 generates $2.72/share payoff, or 85% return. Both contracts benefit from high gamma and moderate delta, ideal for a stock with a 4.6% daily move and 121.5% implied volatility.
• Aggressive bulls should target APLD20251107C34 into a break above $37.17 (intraday high). If $39.85 (Bollinger Upper) holds, the 34-strike call offers 1:1.5 risk-reward potential.

Backtest Applied Digital Stock Performance
Here is the event-driven back-test you requested. (The interactive dashboard has been added for detailed exploration.)Key findings (30-day event window):• 185 surge events detected from 2022-01-01 to 2025-10-28. • Average next-day (1-day) return: +1.13 %; win-rate ≈ 47 %. • Peak relative out-performance appears around day 30 with cumulative +15.8 % vs benchmark +18.0 % (not statistically significant). • Win-rate hovers near 50 %; no persistent edge observed.Interpretation:The data suggest that a ≥5 % intraday spike in Applied Digital has not reliably led to sustained out-performance over the subsequent month during 2022-2025. Short-term follow-through (1-5 days) is modest and statistically indistinct; longer-term cumulative gains lag the benchmark. This indicates the surge signals, on average, do not confer a clear trading advantage.Feel free to explore the interactive charts above for finer-grained insights (distribution of returns, best/worst events, etc.). Let me know if you’d like to adjust parameters (e.g., different surge thresholds, holding periods, or risk controls) or test additional stocks.

APLD’s AI Bet: Ride the Wave or Watch the Gamma?
Applied Digital’s AI infrastructure expansion and $11 billion lease agreement position it as a key beneficiary of the $350 billion AI deployment boom. While the stock’s 4.6% gain and 344% YTD rally suggest momentum is intact, the -135.7 dynamic PE and -7 cents EPS highlight its unprofitable growth model. Investors should monitor the $34.46 (30D support) and $39.85 (Bollinger Upper) levels, with the sector leader Equinix’s -2.13% move signaling broader macro caution. For those willing to bet on the AI tailwind, the APLD20251107C34 call offers a high-gamma, high-liquidity play. If $37.17 holds, this could be the next leg of a $40.20 52-week high challenge.