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Wall Street calls Applied Digital a strong buy. The company is signing $11 billion worth of contracts with CoreWeave. And institutional investors, even NVIDIA, are piling in, and the stock just hit a new 52-week high.
But the company isn’t profitable.
That’s the paradox: a business that’s burning cash, yet being rewarded like it’s the next AI infrastructure king. So is this a once-in-a-decade opportunity or just speculation on steroids?
Applied Digital’s Profile
Before we dig into the numbers, let’s set the stage for who exactly Applied Digital is and why you should care.
Applied Digital was originally founded in 2020 under the name Applied Blockchain.
Headquartered in Dallas, Texas, its primary business at that time was the hosting of bitcoin mining operations.
In 2022, the organisation underwent a strategic rebranding and renamed itself as Applied Digital, retaining its ticker symbol of APLD but shifting its focus into building advanced infrastructure solutions for artificial intelligence as well as building large-scale data centres. That’s a huge pivot from chasing crypto hype to building the backbone for AI.
Earlier this year, they decided to sell their Cloud business to focus entirely on data centres. And that move tells me one thing: they’re doubling down on what they believe will define their future.
APLD Stock Details
So, what’s going on with Applied Digital’s stock price? This is where things start to get interesting.
All right, so Applied Digital recently shot up to a new 52-week high at $16.92, breaking through yet another resistance level around $15.30.
The stock is also up 114% on a YTD basis, and a massive 307% over the last year, meaning that if you had bought Applied Digital a year ago and sat through the volatility, you’d have tripled your capital. That’s the kind of return that turns casual investors into true believers.
Though these are new highs, its current trading price is nowhere near its all-time high at around $34 back in 2021. So the big question now is: is this another run back toward the top, or just a bounce on the way down?
Financials
Big gains are great, but here’s the question every serious investor should ask: do fundamentals actually back the price action?
Let’s take a look at what has happened to Applied Digital’s financials since my last video. In fiscal Q4 2025, the company reported $38.0 million in revenue, which was well below the $42.86 million that Wall Street had expected, although it increased by 41% year over year.
Net losses went down 25% to $26.6 million or 12 cents a share, in line with analyst expectations. So yes, revenue is growing — but losses are still very much alive.
On an annual basis, revenue was up 6% and reached $144.2 million, though these figures include retroactive changes since the company sold its cloud business segment.
The total net loss for the year was $233.7 million, 31% or $72.7 million of which was from the discontinued cloud segment.
There is also a notable increase in the company’s losses on its continuing operations, which went up 118% to $161 million from $74 million from the same period last year.
Applied Digital closed its fiscal year with positive revenue growth, but with higher net losses year on year due to both its continued and discontinued operations. From a fundamental standpoint, this shows us that the company is resilient, but it also shows the financial burden of their decision to sell the cloud business.
And that’s the real red flag here: growth is nice, but if it can’t translate into profits, the stock will eventually run out of fuel.
Growth Catalysts
Alright, so despite the financial red flags, here’s where things get exciting — what could actually push Applied Digital higher?
Coreweave Partnership
On June 2 this year, Applied Digital entered into two 15-year agreements with AI hyperscaler CoreWeave to provide 250 MW of critical IT load at Polaris Forge 1, its Ellendale, North Dakota data center. These agreements are projected to generate approximately $7 billion in contracted revenue over the 15-year term.
Applied Digital’s management recently reported that CoreWeave has exercised its lease option for an additional 150 MW.
Once signed, the lease would raise total capacity to 400 MW and boost contracted revenue by $4 billion, bringing the total to $11 billion from the previously projected $7 billion.
With the two 15-year lease agreements now in place, management believes that Applied Digital is “advancing towards finalising the project financing to ensure long-term financial stability and support the campus’ continued growth and scalability”.
If all goes according to plan, that $11 billion over the next 15 years could translate into $733 million in additional annual revenue. Not bad for a company that just reported $144.2 million for its FY 2025. So, you could say this partnership alone has the power to completely redefine their revenue profile.
Data Centre Demand
Next, there’s the increasing demand for data centre infrastructure. Big players like Microsoft, Meta, and others are ramping up on data centre expenditures. Now, while members of the Magnificent Seven aren’t knocking on Applied Digital’s door to provide their infrastructure needs – at least, not yet – such a significant surge in spending validates the demand.
With more demand from big companies, we’ll surely see small players – the ones that can’t build their own data centres – increase. And who will they turn to? Companies like Applied Digital. This is a classic “trickle-down” growth effect: when giants spend billions, the smaller players fuel the ecosystem too.
Institutional Support
Another thing going for the company is its strong institutional support – something that was recently discussed in my Discord channel.
Institutional shareholders are holding 65.67% of Applied Digital’s outstanding shares.
Mitsubishi UFJ Asset Management also recently disclosed that it acquired an additional 30,507 shares of Applied Digital stock in its latest holdings report. This is on top of the 44,595 shares it bought in the last quarter. Mitsubishi UFJ Asset Management now owns a total of 144,993 shares of Applied Digital.
So when you’ve got hedge funds, Japanese banking giants, and companies like NVIDIA all holding stakes, that’s not noise that’s conviction.
Risks and Red Flags
Now, before anyone gets carried away with the upside, let’s talk about the potential landmines. Because every growth story has them.
Lease Cancellations
Everyone has looked at an overpriced sofa or shelf and thought, “It’d be cheaper if I built that myself.” I know I have.
And that’s completely true: if you had the time, resources, and skills, you could build things from scratch and save a ton of money in the process.
Well, that mentality is what Applied Digital is up against. Because here’s the ugly truth about big tech companies: they have the time, the skills, and the resources to build their own, well, everything. That goes for their own AI chips, software stacks, and, of course, data centres.
Remember when I said Microsoft committed to spending more on AI infrastructure? What I didn’t mention is that the company is also cancelling data centre leases in the US.
This shines a big, bright spotlight on the potential risks that third-party providers like Applied Digital are facing. Multi-billion, multi-decade contracts can turn into dust if hyperscalers suddenly put on their Infinity Gauntlets and say, “Fine, I’ll do it myself.”
So the risk here isn’t small, it’s existential.
Still In The Red
And that leads me to my next concern about Applied Digital: despite project announcements and strategic shifts, it’s still operating in the red.
Net losses have only been increasing since 2021, and so far, the company has not laid out any estimate as to when it’ll finally achieve profitability. As far as I can tell, analysts haven’t even ventured a guess here – it’s that murky.
Currently, it appears to me that Applied Digital’s stock price is increasing without regard to the company’s fundamentals. In short, speculation drives its price. And in these situations, any misstep can trigger a sell-off.
But from a technical analysis standpoint, well, they don’t care much about fundamentals. If the indicators and price action look good and there is a “story” that supports the trend, they’ll take the trade, regardless of what the financials say.
Analysts Rating & Verdict
So with all that upside and downside in mind, where does Wall Street actually stand on Applied Digital?
Analysts rate Applied Digital a strong buy with a high target price of $24, which represents a 47% upside potential.
However, I’m more cautious than most investors, so I’d rate it more of a moderate buy because I like the company’s prospects, but the risks are still there, and they’re too big to ignore. In other words: yes, the growth story is compelling — but until those losses start shrinking, I’m not going all in.
If you’re more into high-risk, high-reward plays, then I think Applied Digital might be a good pick for you, but for me, I’d like to see a green bottom line before taking the plunge, even if it means I lose out on the early upside.
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