05. Applied Digital Corporation (NASDAQ:APLD)
Upside Potential: 37.90%
Latest Average Share Price Target: $8.40
Applied Digital Corporation (NASDAQ:APLD) stands out as a compelling data center stock due to its significant advancements in high-performance computing (HPC) and cloud services. Specializing in digital infrastructure solutions, Applied Digital operates through three key segments: Data Center Hosting, Cloud Services, and HPC Hosting. The company, formerly known as Applied Blockchain, Inc., has rebranded to reflect its broader focus and continues to expand its capabilities across North America. The company’s recent earnings call highlighted several positive trends and future growth potential despite some short-term setbacks. For Q4 2024, Applied Digital Corporation (NASDAQ:APLD) reported an impressive revenue increase to $43.7 million from $22 million in the same quarter the previous year. This growth was driven by the expansion of its data center hosting facilities and new cloud service contracts. The data center hosting segment alone contributed $26.9 million, showcasing its strong performance and reliability. Although the company faced challenges, such as power outages at its Ellendale facility, it has taken decisive steps to overcome these issues. The Ellendale facility’s transformer failures were resolved by replacing outdated equipment with advanced technology, resulting in a total of 286 megawatts of data center hosting capacity. This adjustment underscores the company’s commitment to maintaining robust infrastructure and ensuring operational efficiency.
Applied Digital Corporation (NASDAQ:APLD) Cloud Services segment also showed robust growth, generating $16.8 million in revenue and advancing its contracts for high-performance computing power for AI applications. The company’s efforts in expanding its HPC data centers are noteworthy, with 400 megawatts under development across North Dakota and a new 100-megawatt facility in Ellendale designed to support demanding HPC applications. Despite a net loss of $64.8 million for Q4 2024, which included substantial one-time expenses and challenges, the adjusted EBITDA stood at $4.8 million, up from $3.4 million the previous year. This indicates that the company’s core operations remain strong and its growth trajectory is promising.
Looking ahead, Applied Digital Corporation (NASDAQ:APLD) is poised for further growth with its strategic initiatives, including securing a significant lease agreement with a major hyperscaler and advancing construction on additional data center campuses. The company’s ability to attract large-scale customers and invest in cutting-edge infrastructure positions it as a strong player in the data center sector. Given these factors, Applied Digital Corporation (NASDAQ:APLD) represents a promising investment for those looking to capitalize on the growing demand for high-performance computing and cloud services.
