Think It's Too Late to Buy Applied Digital Stock? Here's 1 Reason Why the Rally May Continue.

Key Points

• Applied Digital stock has soared since the company announced a major deal with CoreWeave in June.

• The company's most valuable asset is contracted power for its data centers to meet growing demand for AI.

• Future profits from more deals could justify more highs for the stock.

• 10 stocks we like better than Applied Digital ›

Applied Digital (NASDAQ: APLD) is a leading designer and builder of data centers that has seen its stock rocket around 250% year to date at the time of writing. It's normal to look at a monster run like that and believe you missed the boat, but there's one reason investors should look at the stock's climb as a signal to get on board.

Image source: Getty Images.

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Applied Digital stock is a bargain

The stock jumped in early June when Applied Digital announced a deal to provide 250 megawatts worth of data center capacity for leading artificial intelligence (AI) hyperscaler CoreWeave. This will generate about $7 billion in revenue for the company over a 15-year term.

This is just the beginning. Microsoft just recently signed a multibillion-dollar deal with Nebius for more data center capacity. Applied Digital will get its share of deals.

The problem for hyperscalers like CoreWeave and Microsoft isn't getting access to chips but getting access to data centers. Data center capacity could be in limited supply down the road because of power shortages. Applied Digital has secured power sources for its data centers, which is becoming a valuable commodity. Management revealed on its last earnings call that it had completed diligence and onboarding with two more investment-grade hyperscalers in North America. It just broke ground on building a new $3 billion data center campus in North Dakota.

CEO Wes Cummins believes the company can achieve $1 billion in operating profit in the next three to five years. This is why it's not too late to buy the stock. Applied Digital's current market cap is just $7 billion, implying a cheap multiple on the company's future profit potential.

Should you invest $1,000 in Applied Digital right now?

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John Ballard has positions in Applied Digital. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.