Is Applied Digital Stock a Buy Now?

As a developer and owner of artificial intelligence (AI) data centers, Applied Digital (NASDAQ: APLD) is literally at the center of the AI boom.

In 2025, Applied Digital was one of the top stocks, returning about 221%. This year, it has already gained a staggering 41% as of Feb. 3, trading at more than $35 per share.

In a span of just 13 months it has been a five-bagger -- increasing roughly fivefold from around $7 per share at the start of 2025.

Image source: Getty Images.

Can it keep going higher? Let's take a look.

250% revenue growth

Applied Digital posted its second-quarter earnings on Jan. 7, and the stock shot some 24% higher on its strong results. Revenue increased 250% year over year to $127 million, while it narrowed its net loss to $37 million, or $0.22 per share. That was considerably improved from a $0.63-per-share loss in the same quarter a year earlier.

The AI data center developer energized its Polaris Forge 1 facility in North Dakota, the first of three buildings being built on that campus. It has been contracted out to CoreWeave for 15 years in an $11 billion agreement.

It also inked a 15-year lease with a U.S.-based hyperscaler for 200 megawatts (NW) of AI and high-performance computing capacity at Polaris Forge 2, which is under construction and expected to open in 2026. This deal will generate another $5 billion in revenue for Applied Digital. The company anticipates full capacity at Polaris Forge 2 in early 2027.

Then a third facility will be online at Polaris Forge in 2027.

It also has two other facilities in North Dakota that are at full capacity and handle mostly crypto mining operations for customers. But the Polaris Forge campus is built for AI and HPC computing for more lucrative hyperscalers.

In late January, analysts at Roth wrote in a research note that another hyperscaler agreement was "imminent," so things remain hot.

With its rapid expansion and expected demand from its existing hyperscale customers, as well as new ones, Applied Digital is targeting $1 billion in net operating income for data center hosting in five years. In Q2, it was about $16 million, so the company anticipates massive growth.

Is Applied Digital a buy?

Applied Digital is poised for explosive growth but it probably won't become profitable for a couple of years, due to the massive investments required to build these facilities. It has plenty of revolving credit from Australian asset manager Macquarie Group, so it has access to capital during this build-out phase.

Wall Street analysts remain bullish on Applied Digital, with 100% of the 14 analysts who cover it rating it a buy. It has a median price target of $43.50, which would indicate a 22% return. That's not much compared to the meteoric growth it saw last year, but most investors would take it.

As one of the first movers in building data centers for hyperscalers, Applied Digital has a huge advantage. Investors should not expect profitability for a bit and should monitor that extremely high valuation.

But the revenue is going to keep pouring in as these facilities scale up and more hyperscalers move in. Applied Digital is a stock to buy and hold for the long term.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Macquarie Group. The Motley Fool has a disclosure policy.