Remember when your friend told you about that “sure thing” crypto investment that went to the moon? Well, Applied Digital (APLD) just pulled off something similar – except this time it’s with AI data centers, and the numbers are absolutely bonkers.
We’re talking about a stock that went from around $3.31 to $35 per share. That’s a 955% gain, folks. To put that in perspective, if you’d thrown $1,000 at this thing at the bottom, you’d be sitting on over $10,000 right now. Not bad for a company that was basically left for dead just months ago.
So what’s the deal? Applied Digital builds those massive data centers that power AI – think of them as the digital equivalent of oil refineries, but instead of crude oil, they’re processing all that ChatGPT magic. And right now, everyone wants a piece of the AI action.
The latest catalyst? They just secured $50 million to buy land and start building their second major facility, called Polaris Forge 2. (Yes, they really named it like a sci-fi movie set.) This sent the stock up 25% on Friday alone because, apparently, investors love it when companies spend money they don’t really have.
And that’s where things get spicy. Applied Digital is basically the poster child for “fake it ’til you make it” financing. They’re carrying over $2.6 billion in debt against about $1.9 billion in cash. That’s like having a $260,000 mortgage when you’ve only got $190,000 in the bank – except they keep taking out more loans to build bigger houses.
But here’s the kicker: their main tenant is CoreWeave, which just got a $2 billion investment from Nvidia. It’s like having your landlord’s rich uncle co-sign the lease. CoreWeave is locked into a 15-year deal worth billions, which sounds great until you realize that if CoreWeave hits a rough patch, Applied Digital is basically screwed.
The company is betting everything on AI demand staying red-hot. As long as everyone keeps throwing money at artificial intelligence like it’s the next internet, Applied Digital should be fine. Their revenue is contracted out for years, and they’re building more capacity as fast as they can.
But – and this is a big but – what happens when the AI bubble gets a reality check? We’ve seen this movie before with dot-com stocks, crypto, and pretty much every other “revolutionary” technology. The music stops, the debt payments keep coming, and suddenly that 955% gain starts looking like a 95% loss waiting to happen.
The stock already gave us a preview, dropping 34% recently when investors got spooked about the broader tech selloff. That’s the kind of volatility that separates the day traders from the long-term investors.
Bottom line: Applied Digital is riding the AI wave like a surfer on a tsunami. It’s thrilling, potentially profitable, and absolutely terrifying all at once. If AI infrastructure demand keeps growing, these guys could be printing money. But if the AI hype train derails, well… let’s just say you might want to keep your seatbelt fastened.
This isn’t financial advice, but it’s definitely not boring.