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Could Applied Digital Be One of the Biggest Winners of the AI Infrastructure Boom?
The company is focused on rapidly expanding its data center capacity to meet surging demand.
Applied Digital has also secured significant funds to finance its data center buildouts.
The rapid global adoption of artificial intelligence (AI) is driving a surge in investments in AI infrastructure. However, the key constraint in this expansion is no longer GPU supply, but the shortage of purpose-built data centers capable of supporting the extreme power density and advanced cooling requirements of modern AI workloads. Hence, public hyperscalers are expected to spend almost $350 billion on AI data centers in 2025 alone.
Applied Digital (NASDAQ: APLD) is fast proving to be one of the significant beneficiaries of this trend, with its high-density, liquid-cooled "AI factories," or data centers optimized to run AI training and inferencing workloads.
Applied Digital, Benchmark, Knowles, Cognex, and Flex Stocks Trade Down, What You Need To Know
A number of stocks fell in the afternoon session after investors rotated out of AI-linked high-flyers following underwhelming earnings updates from Oracle and Broadcom as the core thesis shifted from "growth at any cost" to "prove the returns."
Oracle triggered the alarm by missing revenue estimates while simultaneously hiking capital expenditures by $15 billion. This reignited fears that AI infrastructure spending is outpacing actual monetization. Broadcom compounded the anxiety; despite beating earnings, its stock fell as CFO Kirsten Spears cautioned that gross margins may come under pressure as product mix shifts further toward system-level AI sales. This sparked a macro rotation away from AI infrastructure and power plays.
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1 Major Catalyst That Could Send Applied Digital Stock Higher
This data center builder appears undervalued based on its construction pipeline and recent lease agreements made with hyperscalers.
Shares of Applied Digital (APLD 14.43%) have surged 295% year to date, driven by rising demand for additional data center capacity. As one of the leading builders of data centers, the company is benefiting from continued growth in spending on artificial intelligence (AI) infrastructure.
While there are risks associated with executing its growth strategy, Applied Digital is poised to announce more leasing deals for its data centers over the next year, which serves as a significant catalyst for the stock.
Publicly traded hyperscalers are expected to spend $350 billion this year on AI data centers. However, McKinsey has projected that data centers will need $6.7 trillion worldwide to meet the demand for compute power by 2030.
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