So here’s a fun Friday story that probably made some investors very happy: Applied Digital (NASDAQ: APLD) decided to absolutely demolish expectations and rocket up 28% in a single day. And no, this wasn’t some random Reddit-fueled meme stock moment – this company actually earned its victory lap.
What Even Is Applied Digital?
Think of Applied Digital as the landlord for AI’s brain power. While everyone’s obsessing over which chatbot will take over the world, these folks are quietly building and operating the massive data centers where all that artificial thinking actually happens. It’s like being the guy who owns the parking lots outside the hottest nightclub in town – not glamorous, but definitely profitable.
The Earnings That Made Wall Street Do a Double-Take
Here’s what got everyone excited: Applied Digital just posted revenue of $64.2 million, which is 84% higher than last year and way better than the $50 million analysts were expecting. That’s the kind of beat that makes spreadsheet jockeys everywhere very, very happy.
But the real story isn’t just the numbers – it’s what they represent. The company just locked in a massive 150-megawatt lease deal with CoreWeave at their North Dakota facility. To put that in perspective, that’s enough juice to power a decent-sized city, or in this case, train some seriously sophisticated AI models.
Playing the Infrastructure Game
Here’s the brilliant part of Applied Digital’s strategy: instead of trying to build the next ChatGPT killer, they’re selling the shovels in the AI gold rush. While tech giants are throwing around an estimated $350 billion on AI infrastructure this year, Applied Digital is positioning itself as the go-to provider for the physical space and power these projects need.
Their CEO basically said they’re the “modern-day picks and shovels of the intelligence era,” which is both accurate and a pretty solid business model. When everyone’s racing to strike gold, be the person selling the mining equipment.
Building for Tomorrow (And Getting Paid Today)
The company isn’t just sitting on their current success either. They’re breaking ground on a second campus that’ll come online in 2026, and they’re already in talks with another major hyperscaler to fill it up. That’s the kind of forward thinking that suggests this isn’t just a one-quarter wonder.
The financing is locked in through Macquarie Asset Management, so they’re not scrambling for cash to fund expansion. Always a good sign when you’re planning to build massive, power-hungry facilities.
Wall Street Gets Excited
After Friday’s earnings surprise, analysts started updating their price targets faster than a Tesla software update. Roth Capital bumped their target to $56 per share – that’s a 55% upside from current levels. Needham and Northland also raised their targets, because apparently everyone wants to be friends with the cool kid now.
The Reality Check
Look, Applied Digital is now up 372% year-to-date, which is absolutely bonkers by any measure. That kind of run-up means expectations are sky-high, and any stumble could lead to a pretty dramatic correction.
But here’s the thing: in a world where AI infrastructure demand is exploding and supply is limited, being the company that actually owns and operates the facilities isn’t the worst place to be. Sometimes the best play isn’t predicting which AI company will win – it’s investing in the infrastructure they all need to compete.