So you know how everyone’s obsessed with AI these days? Well, turns out someone’s gotta keep all those ChatGPT conversations and AI art generators running somewhere. Enter Applied Digital (NASDAQ: APLD) – basically the landlord for AI’s computing power – and their stock just had a Monday that would make a crypto bro jealous, shooting up 15%.
Here’s the deal: Applied Digital announced they’re building another massive AI data center in North Dakota (because apparently that’s where the cool AI kids hang out now). We’re talking about a $3 billion “AI Factory” called Polaris Forge 2. Yes, they actually called it an AI Factory. Someone in marketing definitely had fun with that one.
The Numbers That Actually Matter
Before you roll your eyes at another “AI company,” let’s talk real business. These guys pulled in $38 million in revenue last quarter – that’s up 41% from last year. Not bad for running what’s essentially very expensive server farms in the middle of nowhere.
But here’s where it gets spicy: analysts think they’ll hit $61 million next quarter (61% jump) and potentially $268 million next year. That’s an 86% increase, which in normal-people terms means “holy crap, this thing is growing fast.”
The stock’s already up 112% this year and a mind-bending 304% over the past 12 months. At $16 per share, it’s either a rocket ship or a very expensive lesson in gravity – time will tell.
Why North Dakota Though?
You might wonder why they’re not building in Silicon Valley or somewhere with better coffee shops. Turns out North Dakota has something tech companies love more than artisanal lattes: cheap electricity and lots of space. When you’re running computers that basically never sleep and consume more power than a small city, location matters.
CEO Wes Cummins says they’re already in “advanced negotiations” with a major hyperscaler (that’s fancy talk for companies like Microsoft, Google, or Amazon who need ridiculous amounts of computing power). Multiple parties are apparently interested, which is corporate speak for “we’ve got options.”
The Reality Check
Now for the less fun part: Applied Digital isn’t actually making money yet. They’re in full “spend money to make money later” mode, which is pretty normal for companies building billion-dollar infrastructure. It’s like opening a restaurant – you’ve got to buy all the equipment before you can start selling burgers.
Wall Street seems optimistic though. Analysts rate it a “strong buy” with a median price target of $18 (that’s about 10% upside). One firm, Craig-Hallum, got so excited after Monday’s news they bumped their target from $12 to $23 per share.
The Bottom Line
Applied Digital is basically betting that our AI addiction will only get worse (spoiler alert: it probably will). They’re building the infrastructure to feed that habit, and so far, it’s working out pretty well for their shareholders.
Just remember: high growth, high reward, high risk. This isn’t your grandmother’s dividend stock – it’s more like strapping yourself to a rocket and hoping it goes to the moon instead of exploding on the launch pad.