Better Data Center Stock: Applied Digital vs. Riot Platforms

Core Insights - The demand for AI computing has led to a surge in data center construction and development, with companies pivoting from cryptocurrency mining to AI data centers [1][2] Company Overview - Applied Digital and Riot Platforms are both transitioning to AI data centers, having initially focused on high-performance computing for Bitcoin and cryptocurrency mining [2] - Applied Digital has seen significant growth, with its stock price increasing by approximately 260% over the past year, while Riot Platforms has been affected by Bitcoin price volatility [3] Financial Performance - Applied Digital reported a 250% year-over-year revenue growth and reduced its net loss by 76% in the most recent quarter, driven by long-term contracts with hyperscalers [6] - Riot Platforms generated a record $180 million in revenue and achieved $104 million in net income, a significant turnaround from a $154 million net loss a year ago [10] Market Outlook - Analysts are optimistic about both companies, with 100% of analysts rating them as a buy. Applied Digital has a median price target of $43.50 per share, indicating a 33% upside, while Riot Platforms has a median price target of $28 per share, suggesting a potential 95% growth [5] - Applied Digital has secured $16 billion in long-term lease agreements and aims for $1 billion in net operating income within five years [9] Strategic Developments - Applied Digital is expanding its operations with new facilities, including Polaris 3 and Delta Forge 1, both set to open in 2027 [7] - Riot Platforms is diversifying its revenue by converting existing crypto mining facilities into data centers and has signed a 10-year lease agreement with AMD, potentially generating up to $1 billion in revenue [13][14]