APLD Rides on Accelerating AI Infrastructure Demand: What's Ahead?

Group 1: Company Overview - Applied Digital (APLD) is experiencing increased demand for AI infrastructure, highlighted by a 15-year lease agreement with CoreWeave (CRWV) for 250 megawatts at Polaris Forge 1, with total anticipated lease revenues reaching approximately $11 billion [1][10] - Polaris Forge 1 is specifically designed for AI and high-performance computing (HPC), with a scalable capacity of up to 1 gigawatt, and the first facility is expected to be operational by Q4 2025 [2][10] - The facility aims to provide power-dense solutions, as AI queries require 15 times the electricity of traditional queries, presenting significant growth opportunities for APLD [3][10] Group 2: Market Dynamics - Strong spending by hyperscalers, projected to exceed $350 billion, is favorable for APLD, as these companies require high-capacity data centers to support AI and GPU-driven applications [4] - APLD currently operates around 286 megawatts of blockchain data center capacity, positioning it well within the growing market [4] Group 3: Competitive Landscape - APLD faces competition from AI infrastructure providers like Vertiv (VRT) and established data center operators such as Equinix (EQIX) [5] - Vertiv has seen organic order growth of approximately 11% in the past year and has strengthened its market position through collaborations and partnerships, including one with NVIDIA [6] - Equinix is expanding its global IBX data centers and anticipates a revenue increase of 5-6% in 2025, driven by rising demand for high-performing data centers [7] Group 4: Financial Performance - APLD's stock has surged 99.7% year-to-date, significantly outperforming the broader Zacks Finance sector's return of 12.8% and the Zacks Financial-Miscellaneous Services industry's appreciation of 5.4% [8] - The Zacks Consensus Estimate for APLD's first-quarter fiscal 2026 loss is projected at 11 cents per share, which is a wider loss compared to the previous year [12] - APLD's stock is considered overvalued, with a forward 12-month price/sales ratio of 13.24X compared to the broader sector's 8.79X, resulting in a Value Score of F [15]