APLD vs. DELL: Which AI Infrastructure Stock Has More Upside?

Core Insights - Applied Digital (APLD) and Dell Technologies (DELL) are significant players in the AI infrastructure market, with APLD focusing on purpose-built data centers and high-performance computing, while DELL specializes in AI-optimized servers and integrated solutions [1][8] Market Growth - The global AI infrastructure market is expected to grow from $182.07 billion in 2025 to $394.05 billion by 2030, with a CAGR of 19.4%, benefiting both APLD and DELL [2] Applied Digital (APLD) Overview - APLD operates as a pure-play AI infrastructure developer, securing approximately $11 billion in contracted lease revenue with CoreWeave, which provides long-term revenue visibility and positions APLD to generate around $500 million in annual net operating income [3][4] - The company is constructing Polaris Forge 2, adding 300 megawatts of capacity, with a total of 700 megawatts under construction and a 4-gigawatt development pipeline supported by a $5 billion equity facility [4] - APLD's proprietary cooling design aims for a power usage effectiveness ratio of 1.18, offering operational cost advantages, although it faces challenges with cash reserves relative to debt obligations and construction timelines [4] Dell Technologies (DELL) Overview - DELL operates as an established AI infrastructure hardware supplier, generating $30 billion in cumulative AI server orders and maintaining an $18.4 billion backlog, indicating strong demand [6][9] - The company provides infrastructure components to hyperscalers and has strategic partnerships with technology providers like NVIDIA, enabling rapid AI rack deployment [7] - DELL faces commodity cost inflation affecting margins and operates in a competitive server market, which limits pricing power and creates execution risks [7][9] Performance Comparison - Over the past six months, APLD shares have surged 131.4%, while DELL shares have only advanced 3%, reflecting investor preference for APLD's pure-play AI infrastructure model [11] - APLD trades at a forward price-to-sales ratio of 15.71x, indicating a premium for its high-margin recurring lease revenue model, while DELL trades at 0.67x, reflecting its mature hardware operations [14] Conclusion - APLD's positioning in the AI infrastructure market, high-margin lease model, and significant contracted revenues make it a compelling growth opportunity, while DELL's established profitability is constrained by commodity pressures and competitive dynamics [17]