Remember when your friend told you about that “sure thing” crypto investment that went to zero? Well, Applied Digital (NASDAQ: APLD) is basically the opposite of that story – except this time it’s actually real.
This data center darling just popped another 14% on Friday, bringing its year-to-date gains to a frankly ridiculous 255%. And before you roll your eyes and mutter “bubble,” hear me out – there’s actually some solid reasoning behind this rocket ship.
The Deal That Got Everyone Excited
Applied Digital just scored a sweet financing deal with Macquarie Group (yes, the Australian investment bank that somehow has its fingers in everything). They’re getting access to a loan facility to fund new AI data center projects, with an initial $100 million draw ready to go.
Think of it like getting pre-approved for a mortgage, except instead of buying a house, you’re building massive warehouses filled with computers that make AI go brrr. The timing couldn’t be better – everyone and their grandmother wants AI infrastructure right now.
Why This Actually Makes Sense
Here’s where it gets interesting. Applied Digital isn’t just another “we do AI stuff” company throwing around buzzwords. They’ve got real contracts with real money attached:
• A 15-year lease with CoreWeave worth about $11 billion in contract value
• Another hyperscaler (fancy term for big tech company) moving in early 2026 with a $5 billion contract
• Two data center campuses already operational in North Dakota
CEO Wes Cummins says they’re targeting $1 billion in net operating income within five years. That’s not Monopoly money – that’s “buy a small country” money.
The Numbers Don’t Lie (Mostly)
Last quarter, revenue jumped 84% year-over-year to $64 million. Sure, they’re still losing money ($28 million loss), but that’s 275% better than the same period last year. It’s like being less broke – technically still broke, but trending in the right direction.
Wall Street seems to agree. All 12 analysts covering the stock rate it a “buy” with a median price target of $40.50. That suggests another 49% upside from current levels, which would make this the gift that keeps on giving.
The Reality Check
Look, a stock up 255% in one year should make anyone nervous. But when you’re riding the AI wave and you’ve got billion-dollar contracts locked in, maybe – just maybe – this isn’t your typical meme stock situation.
The company’s forward P/E of 19 based on next year’s earnings projections suggests profitability is actually within reach. That’s refreshingly reasonable in a market where some AI stocks trade at “hopes and dreams” valuations.
Bottom Line
Applied Digital is basically betting that our AI-obsessed future needs a lot more data centers. Given that ChatGPT can’t run on thoughts and prayers, that seems like a pretty safe bet. Whether the stock can keep defying gravity is anyone’s guess, but at least this time there’s actual business fundamentals backing up the hype.
Just remember: past performance doesn’t guarantee future results, but it sure makes for good cocktail party conversation.