APLD Stock: Could Its Latest Pivot Revitalize Applied Digital?

Dallas, Texas-based Applied Digital [APLD] offers data center hosting, cloud services and high-performance computing (HPC) support to its clients in the blockchain and artificial intelligence (AI) spaces.

Initially known as Applied Blockchain, the company changed its name in August 2022 to reflect a widening of its client base, from cryptocurrency miners to a range of tech firms in need of computing power.

The company operates two sites in North Dakota with over 280MW of crypto mining capacity. Additionally, it has deployed more than 1,000 GPUs to third-party data centers to support its AI cloud business. 

With its business model focused on the acquisition, powering and renting of data centers, the firm has been on a gradual trajectory to evolve into a real estate investment trust (REIT). However, several strategic pivots throughout its short history paint a more complicated picture. 

OPTO explores how Applied Digital is positioning itself to benefit from ballooning data center demand as the AI boom continues. 

Farewell to Cloud?

As part of its Q3 2025 earnings release on April 14, the company announced its plans to sell its cloud services unit, initially launched in May 2023 under the purview of its subsidiary Sai Computing. While Applied Digital’s cloud business generated a third of its FY2024 revenue, it is reportedly seen by potential clients as a competitor, CEO Wes Cummins noted. By shedding this asset, the company is working toward reclassifying as a pure REIT.

Meanwhile, the firm has secured significant financing to build out its data center capacity. 

In January 2025, it signed a deal with Macquarie Asset Management for an investment of up to $5bn, with an initial commitment of $900m set to help support the construction of up to 400MW HPC hosting at its Ellendale Campus in North Dakota. The agreement gives Macquarie a 15% common equity interest of Applied’s HPC segment, and could help the company build over 2GW of HPC data center capacity. 

The next month, the company signed an agreement with Japan’s SMBC Group for an additional $375m in financing, also to support the expansion of its Ellendale Campus. 

The company’s Q3 revenue, reported on April 14, rose 22% year-over-year to $52.9m — although it fell short of analyst expectations of $63.4m. This was in part due to a 7% year-over-year decline in data center hosting revenue. Its doomed cloud services segment, meanwhile, recorded revenue of $17.8m, an increase of 220% compared to the year-ago period. 

APLD’s Share Price Troubles

Applied Digital made its public debut — Applied Blockchain — in April 2022 with a $40m IPO, priced at $5 per share. 

The stock’s valuation hovered around $2 for most of the year before spiking in mid-2023. It pulled back from that rally in 2024, only to spike again in November 2024 amid investor optimism surrounding US President Donald Trump’s perceived support of cryptocurrency and wider tech deregulation. 

After hitting a 52-week high of $12.48 on February 17, the share price has fallen some 67.31% through April 23, dragged down by market uncertainty surrounding President Trump’s tariffs and Q3 revenue that fell short of market expectations. 

APLD stock was down 46.6% in the year to April 23, but up 50.55% in the past 12 months. 

APLD vs GDS vs EQIX

While Applied Digital’s focus on AI and crypto clients sets it apart from many similar firms, it has a number of competitors involved in both cloud services and data center management. 

Shanghai-based GDS Holdings [GDS] offers both cloud and hosting services while also operating data centers, primarily for telecommunications and IT service providers. 

Similarly to Applied Digital, GDS continues to operate at a loss; however, its net revenue increased 9.1% year-over-year in its Q4 2024, as announced on March 18. Additionally, the company appears to be positioning its international subsidiary, DayOne, for an IPO. 

Digital services firm Equinix [EQIX] is notable giant in the data center space as a REIT operating over 260 facilities across six continents. 

In its Q4 2024 earnings call on February 12, CEO Adaire Fox-Martin highlighted the firm’s $8.7bn in revenue for FY2024, marking 22 years of consecutive quarterly revenue growth. Equinix also anticipates 7–8% revenue growth in 2025, driven by AI-focused demand and capacity expansion.

Source: Yahoo Finance

While Applied Digital remains unprofitable, its growth estimates are the most attractive out of the three stocks. GDS provides a useful comparison, both in terms of size and growth prospects. Meanwhile, with its high P/E ratio, EQIX stock is a much more expensive stock, due largely to its relative size and established business. 

APLD Stock: The Investment Case

The Bull Case for Applied Digital

Strong financing support from investors alongside HPC capacity expansions could help APLD rally in the coming months, having fallen rather steeply in recent weeks. 

Many analysts are celebrating Applied Digital’s repositioning as a pure-play REIT. As Cummins noted in the most recent earning call, “investors typically assign higher multiples to data center businesses due to their stability and long-term growth potential.”

In December 2024, Cantor Fitzgerald initiated Applied Digital with an ‘overweight’ rating, citing the firm’s potential to become a large HPC data center operator in the US. It assigned APLD a $15 price target, an increase of 267.65% from its April 23 closing price.

The Bear Case for Applied Digital

Despite ballooning forecasts for data center demand, the road forward is unlikely to be smooth, as Applied’s numerous pivots have already demonstrated. Similarly, its potential for growth may be tied to a relatively small number of deals.  

As Cantor Fizgerald analyst Brett Knoblauch noted in December, “APLD is taking the ‘if you build it, they will come’ approach, as negotiations with ‘Hyperscaler 1’ have continuously been extended.” As of April, Applied Digital was still searching for its first tenant for its Ellendale Campus, suggesting that growth may not manifest as easily as expected.

Additionally, Applied Digital is a relatively recent entry into a highly competitive space, with behemoths like Equinix, Amazon [AMZN] and Microsoft [MSFT] already considerably ahead.  

Conclusion

Between recent financing agreements and a refocusing on data center provision, Applied Digital could be poised to grow considerably as its new HPC data centers come online. However, as a pre-profit newcomer in a theme dominated by big tech firms, it could look like a risky opportunity to the more cautious investor.