Applied Digital Corporation: HPC and AI

Imagine a world where computers can think faster, process massive amounts of data in seconds, and help solve problems in healthcare, finance, and even retail. That’s the world Applied Digital Corporation (APLD) is helping to build. Based in Dallas, Texas, APLD is a company that designs and operates the digital backbone—think data centers and cloud services—that powers cutting-edge technologies like artificial intelligence (AI) and high-performance computing (HPC).

Let’s dive into what APLD does, the industry it operates in, and why its future looks so exciting.

Who Is Applied Digital Corporation?

Applied Digital Corporation, listed on the NASDAQ as APLD, started as Applied Blockchain, Inc., before rebranding in 2022 to reflect its broader focus. The company operates in three main areas:

• Data Center Hosting: APLD builds and manages data centers that house powerful computers for clients. These centers were initially used for cryptocurrency mining but are now shifting to support bigger players in AI and cloud computing.
• Cloud Services: Through its Sai Computing brand, APLD offers cloud-based solutions that let businesses access powerful computing resources without owning expensive hardware.
• HPC Hosting: This segment focuses on providing infrastructure for tasks that need a lot of computing power, like AI, machine learning, and scientific simulations.

Think of APLD as the company that provides the “picks and shovels” for the AI and tech gold rush. Instead of mining gold itself, it builds the tools and spaces others need to succeed.

The Industry and Sector APLD Operates In

APLD is part of the Information Technology (IT) sector, specifically within the IT Services industry. This industry includes companies that provide digital infrastructure, cloud computing, and data center services. It’s a fast-growing field because businesses, governments, and even individuals rely on technology more than ever.

The IT Services industry is closely tied to high-performance computing (HPC) and artificial intelligence (AI). HPC involves super-powerful computers that can handle complex tasks, like weather forecasting or drug discovery. AI, on the other hand, is about teaching computers to mimic human thinking—think self-driving cars or chatbots that feel almost human.

The demand for HPC and AI is skyrocketing. Companies need data centers to store and process huge amounts of data, and they need cloud services to access computing power on demand. That’s where APLD comes in, building the infrastructure to make it all possible.

Why Is This Industry Booming?

The digital infrastructure industry is growing fast for a few key reasons:

• AI Revolution: AI is transforming everything from healthcare (better diagnostics) to retail (personalized shopping experiences). The global AI market is expected to grow at a rate of over 25% annually in the coming years, and every AI application needs robust data centers.
• Cloud Computing Growth: More businesses are moving their operations to the cloud to save costs and stay flexible. The cloud computing market is projected to hit $1.6 trillion by 2030.
• Data Explosion: We’re creating more data than ever—think social media posts, online shopping, or streaming videos. All this data needs to be stored and processed, driving demand for data centers.
• Sustainability Push: Companies like APLD are also focusing on energy-efficient data centers, which is a big deal as governments and businesses aim to reduce their carbon footprints.

APLD is riding these waves, positioning itself as a key player in a market that’s expected to grow significantly. For example, the data center sector alone is projected to reach $494.5 billion by 2033, growing at a rate of 9.29% annually.

APLD’s Role and Recent Wins

APLD is making smart moves to stay ahead. In 2025, the company secured a massive $5 billion investment from Macquarie Asset Management to expand its HPC data centers. This deal also gave Macquarie a 15% stake in APLD, showing strong confidence in its future. Additionally, a $375 million investment from Sumitomo Mitsui Banking Corporation is helping APLD grow its AI-focused data centers in North Dakota.

Another big win? Tech giant NVIDIA, a leader in AI hardware, continues to hold a significant stake in APLD (7.7 million shares), even as it sells off other investments. This signals that NVIDIA sees APLD as a critical partner in the AI boom.

Financially, APLD is showing promise too. In its second quarter of fiscal year 2025, revenue grew 51% year-over-year to $63.9 million, beating Wall Street expectations. While the company is still reporting losses (common for fast-growing tech firms), its adjusted earnings are improving, and analysts are optimistic. Eight analysts rate APLD as a “Strong Buy” with an average price target of $10.44, suggesting significant growth potential from its current price.

Future Potential for the Industry and APLD

The future looks bright for both APLD and the digital infrastructure industry. Here’s why:

• Growing Demand for AI and HPC: As AI becomes more integrated into daily life, the need for data centers and cloud services will only increase. APLD’s focus on HPC positions it to serve industries like healthcare, finance, and autonomous vehicles.
• Strategic Partnerships: APLD’s ties with NVIDIA and major financial backers like Macquarie and Sumitomo give it the resources and credibility to compete with bigger players.
• Sustainability Focus: APLD’s emphasis on energy-efficient data centers aligns with global trends toward greener technology, potentially giving it an edge in attracting eco-conscious clients.
• Market Expansion: The shift from crypto mining to serving hyperscalers (big tech companies like Amazon or Google) opens up new revenue streams for APLD. This pivot could drive long-term growth.

However, there are challenges. The industry is competitive, with giants like Amazon Web Services and Microsoft Azure dominating cloud computing. APLD also faces risks like high energy costs for data centers and potential regulatory changes, especially around cryptocurrency (a smaller part of its business). Still, APLD’s nimble approach and focus on niche HPC markets give it room to carve out a share.

What’s Next for APLD?

Looking ahead, APLD is well-positioned to capitalize on the AI and HPC boom. Its recent investments and partnerships suggest it’s ready to scale up, particularly with its Ellendale HPC Campus in North Dakota. If APLD can keep delivering strong revenue growth and secure more contracts with hyperscalers, its stock could see significant upside. Analysts predict a potential 164% increase in stock price over the next 12 months, though investing always comes with risks.

I will post another article on the chart analysis of APLD tomorrow.

Disclaimer

Please refer to the disclaimer page for the complete disclaimer. I am not holding APLD for long term and usually make trades for short term gains.