Applied Digital: A Curious Climb

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Now, Applied Digital – a name that sounds suspiciously like something a robot would dream up – has been having a rather splendid time. It’s shot up nearly 300% since 2025 began, a truly enormous leap for a company that builds… well, let’s call them ‘brain boxes’ for artificial intelligence. But, as often happens with things that climb too high, it’s recently had a bit of a tumble, down nearly 30% from its peak in January. A bit like a greedy squirrel losing its grip on a particularly large nut.

Is this a moment to pounce? I suspect it might be. Provided you have the patience of a saint, and a stomach for a bit of a wobble. You see, the market, bless its cotton socks, has developed a bit of a twitch when it comes to anything ‘AI’. It wants instant gratification, like a child demanding a second helping of sweets.

The AI Appetite Wanes

For weeks now, investors have been peering at AI spending with a distinctly grumpy expression. They want to see a return on all that money being flung at these blinking, whirring machines. But the truth is, building the future takes time. It’s not like snapping your fingers and suddenly having a mountain of chocolate. A lot of the good stuff is still brewing, still being built, and may take years to fully blossom. Eventually, the market will remember its manners and get back on the AI bandwagon, and Applied Digital, with its rows and rows of ‘brain boxes’, could be one of the first to rocket off.

Applied Digital, you see, is in the business of building these data centers – enormous, humming sheds filled with computing power – in just the right locations. They rent them out to the AI chaps, who use them to… well, to do all sorts of clever, complicated things that most of us wouldn’t understand even if you drew us a diagram. They have several of these sheds under construction, and a few already churning out computing power. Right now, it’s a decent little earner, but really, it’s a story about what could be, not what is.

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In the last quarter (ending November 2025), Applied Digital’s revenue soared a whopping 250% to $127 million. Quite impressive, really. But they also posted a loss of $31 million. Why? Because they’re spending everything they have to get these ‘brain box’ sheds up and running, capturing market share that, if they’re clever about it, will print money for decades. A bit like a particularly industrious ant building a truly enormous hill.

It’s a sensible strategy, and it’s likely to pay off. But investors must be patient. The market, you see, is often rather shortsighted, looking for instant rewards instead of long-term gains. It needs to learn that good things take time, like growing a magnificent beard or baking a truly spectacular cake.

If you try to value it using those old-fashioned metrics – like the price-to-sales ratio – it looks rather expensive, at 26 times sales. A bit like trying to buy a castle with pocket change.

Wall Street expects revenue to grow by 61% this year and 55% next year, so that valuation should come down eventually. But it will take time, like waiting for a snail to win a race.

If you believe in the AI buildout and think it’s going to last for several years, Applied Digital could be a rather interesting buy right now. But you’ll need a strong stomach and a healthy dose of patience. It’s going to be a bit of a bumpy ride, like sailing a leaky boat in a stormy sea. But if you can weather the storm, you might just find yourself with a treasure chest full of profits.

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2026-02-28 01:02