Applied Digital (NASDAQ: APLD) – Undervalued Data Center Operator with AI-Fueled Upside
Applied Digital (NASDAQ: APLD) is still flying under the radar, but the growth story here is starting to accelerate—and the recent price action may be just the beginning.
The company designs, builds, and operates high-performance data centers to serve clients in AI, blockchain, and other compute-intensive industries. That alone puts it squarely in the path of some of the most powerful secular trends in tech. And while the stock is already up nearly 60% over the past year, it’s still trading almost 50% below its February 2025 highs.
If the company simply returns to its prior peak of $12.48, shares would nearly double from current levels around $6.83. That kind of upside doesn’t require overly aggressive assumptions—just continued execution and demand growth.
Applied currently operates two HPC data centers and two blockchain-focused facilities in North Dakota—a state that offers cost and energy advantages for data infrastructure thanks to cold weather and low electricity costs. It also runs four additional digital cloud data centers across Colorado, Minnesota, Nevada, and Utah, although that business is now being divested. The board recently approved a plan to sell off its cloud services division entirely, freeing up capital to reinvest in higher-growth AI and HPC operations.
Add to that two recent financing deals and the company is in a stronger position to meet surging demand from enterprise and AI workloads.
With a market cap around $2 billion and a gross margin of just 5.6%, there’s a lot of room for operating leverage to kick in as scale improves. This is a classic case of a small-cap infrastructure play benefiting from a big-tech trend. If you’re looking for early exposure to the infrastructure behind AI—not just the software hype—Applied Digital is worth a close look.
