1. Applied Digital Corp. (NASDAQ:APLD)
Upside Potential: 70%
Number of hedge funds: 26
Applied Digital Corp. (NASDAQ:APLD) tops our list with a 70% upside after China’s DeepSeek triggered selloff. The company is a niche player in the data center space, engaged in designing, developing, and operating cutting-edge digital infrastructure throughout North America. Originally a crypto miner, the company terminated mining operations in March 2022 and transitioned to offering digital infrastructure solutions and cloud services to the fast-growing sectors of High-Performance Computing (HPC) and AI.
For the fiscal year ended May 2024, Applied Digital Corp. (NASDAQ:APLD) generated the majority of its revenue (~85%) from its Data Center Hosting (DCH) business, which provides infrastructure services to crypto mining customers, allowing them to rent space based on their power requirements. During the same period, its Cloud Services (CS) business, which provides high-performance computing power for AI and ML applications, commanded 17% of total revenue. By Q2 2025 (November 2024), the revenue mix had substantially improved, with CS revenue witnessing a 523% year-on-year growth.
In addition to these established businesses, Applied Digital Corp. (NASDAQ:APLD) is ramping up its HPC Data Center Hosting business, aimed at designing, building, and operating next-generation data centers for hyperscalers. The company already has a 100 MW HPC facility under construction in Ellendale, North Dakota. To support its growth initiatives, Applied Digital entered into a partnership with Macquarie Asset Management for funding of up to $5.0 billion to support the full 400 MW build-out of the Ellendale HPC Campus.
This is a significant step in Applied Digital Corp. (NASDAQ:APLD)’s growth trajectory, as highlighted by Wes Cummins, Chairman and CEO of Applied Digital:
“We believe this expanded relationship with MAM positions Applied Digital for significant growth in the industry, establishing Applied Digital as one of the fastest-growing HPC data center owners, operators and developers in the United States. At today’s build costs, we will have a significant portion of the equity needed to construct over 2.0 GW of HPC data center capacity, including our Ellendale HPC Campus.”
While we acknowledge the potential of APLD to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than APLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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