In recent years, the popularity of artificial intelligence (AI) has significantly impacted the world of investment. Aside from AI chip manufacturers like Nvidia (NVDA), other firms, such as global investment houses, have also capitalized on this boom by funding companies that provide essential services to the AI ecosystem, including data storage and leasing AI chips. Asset management firm Macquarie (MCQEF) recently agreed to buy a 15% stake in Applied Digital’s (APLD) high-performance computing business. It will invest up to $5 billion in the company’s AI data centers. This significant investment has caused Applied Digital’s shares to rise by about 10%.
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Since the launch of ChatGPT in late 2022, infrastructure providers like Applied Digital have seen a surge in investments, allowing them to create AI models and gain a competitive edge. This new funding further empowers Applied Digital to continue on its growth trajectory. Investors interested in participating in the upside potential of the demand for AI data centers should add APLD to their list of candidates.
The Growing Demand for Data Centers
Applied Digital Corporation designs and operates digital infrastructure solutions and cloud services for high-performance computing (HPC) and artificial intelligence industries. The organization operates in three main segments: Data Center Hosting Business, Cloud Services Business, and HPC Hosting Business. It is involved in providing infrastructure services to crypto mining customers and offering GPU computing solutions for AI, machine learning, and other HPC tasks.
The American market is experiencing a significant demand for hyperscale data centers due to the increasing need for AI capabilities. However, this rapid expansion poses a considerable challenge to electricity availability. A recent report by Morgan Stanley (MS) suggests that by 2028, there could be a shortfall of around 36 GW in power availability for U.S. data centers, equivalent to the output of 36 nuclear power plants.
Applied Digital was an early mover in recognizing this growing demand and had started constructing its facilities in anticipation of these needs. Supported by strategic investments from organizations like CIM Group (CMRF), NVIDIA, and Macquarie Asset Management, Applied Digital believes it is well-positioned to capitalize on these trends, reducing capital costs and accelerating pipeline development.
Macquarie Shows Its Faith in APLD Technology
According to a recent press release, Macquarie is set to invest up to $5 billion in Applied Digital’s high-performance computing (HPC) business. Under the agreement, Macquarie will invest up to $900 million in Applied Digital’s data center campus in North Dakota and has the right to invest an additional $4.1 billion in future data centers developed by the company over the next 30 months. This investment will be made as preferred equity. The fund injection will help Applied Digital repay project-level debt and recover over $300 million of its equity investment in the North Dakota facilities.
Recent Top-and-Bottom-line Beats
Applied Digital recently delivered its financial report for Q2 2025. Revenue of $63.9 million marked a 51% year-over-year increase and beat analyst expectations by $2.3 million. The growth was primarily led by expanding the cloud services business, supported by deploying added GPU clusters.
Cost of revenue rose to $52.4 million from $29.8 million, year-over-year, due to business expansion, as more facilities were operational and additional services were offered to clients. The firm also saw an increase in selling, general, and administrative expenses from $20.3 million in Q2 2024 to $29.8 million.
The firm’s adjusted net loss was $12.6 million, and adjusted EBITDA stood at $21.4 million, up 93% from the previous year’s period. Non-GAAP earnings per share (EPS) of -$0.06 beat consensus projections by $0.08.
Analysts Remain Bullish
The stock has been on an upward trend, climbing over 54% in the past year. It trades near the high end of its 52-week price range of $2.36 – $11.25 and shows mixed technical signals. It trades at a bit of a premium based on the P/S ratio of 5.16x compared to the Information Technology sector average of 3.15x.
Analysts following the company have been constructive on APLD stock. Applied Digital Corporation is rated a Strong Buy overall, based on the recent recommendations of seven analysts. Their average price target for APLD stock is $12.00, which represents a potential upside of 40.52% from current levels. However, I suspect we may see some upward revisions to this based on recent developments.
Final Analysis of APLD
Applied Digital is a strong contender for investors looking to tap into this fast-growing market. Its strategic collaborations with major industry players like Macquarie, NVIDIA, and CIM Group, along with the substantial investments these relationships bring, have set the company up for continued success. Macquarie’s recent agreement to invest up to $5 billion in Applied Digital’s high-performance computing sector underscores this and provides the financial stability the company needs to recover and grow. Coupled with Applied Digital’s robust Q2 2025 financial report and the sustained confidence from industry analysts, it’s clear that APLD is one to monitor.
