Why This Data Center Stock Is Skyrocketing
ValueWalk | Jun 03, 2025 02:18AM ET
Applied Digital (NASDAQ:APLD) stock was taking off on Monday, rising a whopping 54% on the day to nearly $11 per share.
The catalyst for the surge was a deal that Applied Digital, which designs, builds and operates high-performance computing data centers, signed with a major AI company, CoreWeave (NASDAQ:CRWV). CoreWeave is known as the “AI hyperscaler,” as it provides infrastructure to accelerate high-performance computing.
Applied Digital signed two 15-year lease agreements with CoreWeave. As part of the deal, Applied Digital will host CoreWeave’s artificial intelligence (AI) and high-performance computing (HPC) infrastructure at its data center campus in Ellendale, N.D.
Applied Digital expects to generate approximately $7 billion in revenue from the leases.
Applied Digital will deliver 250 megawatts of critical IT load to CoreWeave, and CoreWeave has the option to access an additional 150 megawatts of critical IT load at Ellendale.
“We believe these leases solidify Applied Digital’s position as an emerging provider of infrastructure critical to the next generation of artificial intelligence and high-performance computing,” Wes Cummins, chairman and CEO of Applied Digital, said. “As demand for AI accelerates exponentially, we believe that we are uniquely positioned to deliver substantial returns while supporting the evolving and dynamic needs of these rapidly evolving sectors. We view CoreWeave as an ideal partner as we accelerate our growth and innovation.”
The Ellendale campus can host 400 MW of critical IT load but is designed to scale up to 1+ gigawatts of power capacity over time.
“Foundational” Step for Applied Digital
The first 100 MW data center for CoreWeave will be available in the fourth quarter. A second building, currently under construction, will house a 150 MW data center for CoreWeave. That is expected to be ready for service in the middle of 2026. A third 150 MW building, which is in the planning stages, should be ready for service in 2027.
Cummins sees this deal with CoreWeave as a foundational step in the company’s growth.
“We believe Ellendale is more than a development project — it’s a launchpad for the future of AI infrastructure,” Cummins said. “We intend for this platform to put us in a strong position to support early demand while continuing to grow alongside our customers. Through these newly signed long-term leases with CoreWeave, we are taking a step forward in our strategic expansion into advanced compute infrastructure.”
Get The News You Want
In its most recent quarter, Applied Digital saw revenue increase 22% year-over-year to $54 million, but it fell short of analysts’ estimates. Further, it had a net loss of $36 million, or 16 cents per share, which beat estimates and was 69% better than the same quarter a year ago. The company also announced plans to sell its cloud services business.
The stock has a median price target of $10 per share, which could be down 2% from where it is now after today’s surge. Check back on analysts’ reports to see if they raise its target after this deal.
While this is a major deal for Applied Digital, keep in mind that the company is still not profitable. But it is well-positioned as a key player in a booming data center industry, so this is one to keep an eye on — particularly after this massive deal that is expected to generate $7 billion in revenue.
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