Applied Digital: Millionaire Maker or Just a Hot Data Center?

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Okay, look. Everyone’s chasing the AI unicorn these days. It’s like 1999 all over again, except instead of Pets.com socks, it’s… well, more data centers. And Applied Digital (APLD +25.52%) is currently the hottest ticket in that particular amusement park. Up 50% this year? Honey, my grandmother gets more cautious returns on her bingo nights. And since the beginning of 2025? Nearly 400%. It’s enough to make you wonder if they’re building servers or printing money. The question, as always, is: can this ride actually make you a millionaire, or will it just leave you with a slightly fancier paperweight?

Applied Digital is Building…What Exactly?

So, Applied Digital doesn’t actually make anything, which, let’s be honest, is the business model of half of Silicon Valley. They build and operate data centers. Which is…a thing. Apparently, the big AI hyperscalers – the Googles and the Amazons of the world – are realizing that owning a ton of physical infrastructure is…a hassle. It’s like deciding you don’t want to own a timeshare after realizing you hate family vacations. They like the idea of being “asset-light,” which is corporate speak for “let someone else deal with the plumbing.” This opens the door for companies like Applied Digital to swoop in and say, “Allow us to handle the electricity bills and the server maintenance, for a reasonable fee, of course.”

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The key, apparently, is finding places with cheap power. AI eats electricity like I eat carbs when I’m stressed. They’ve landed in North and South Dakota, which, geographically speaking, is about as far from a decent latte as you can get. But hey, excess energy capacity! And it’s cold enough up there that you don’t need to spend a fortune on air conditioning. It’s like nature is actively trying to help them save money. They’ve got 700 megawatts under construction and another 4.3 gigawatts in development. That’s a lot of watts. Enough to power a small country, or at least a very enthusiastic gaming convention.

All this growth should translate to a booming stock price. But the market is a fickle beast. And sometimes, a good story isn’t enough.

Applied Digital Stock: Priced for Perfection

Let’s just say the stock isn’t exactly cheap. It’s trading at 32 times sales. Thirty-two! That’s like paying for a lifetime supply of avocado toast for a single slice. They don’t have any profits yet, and they haven’t even hinted at when they might. Which, okay, is normal for a company that’s basically spending money as fast as it can. They’re building, building, building. It’s like a digital version of the WPA. But eventually, you have to start earning some money, right? The question is, what does the business model look like when the building spree is over? That’s the part that keeps me up at night.

Wall Street analysts are expecting 61% growth in fiscal year 2026 and 55% in 2027. That’s… optimistic. There’s clearly demand for AI computing power. As more data centers come online, Applied Digital’s revenue will likely increase. But a lot of that growth is already baked into the stock price. It’s a projection of what the company might be worth years down the road. It’s like buying a lottery ticket and then spending the winnings before you’ve even won.

Honestly, I’m skeptical. I don’t think Applied Digital is going to magically turn a modest investment into a seven-figure windfall. It might beat the market over the long term, but I wouldn’t bet my retirement on it.

There are plenty of ways to play the AI buildout. I’d rather own a company like Nvidia. They’re actually making money right now. Nvidia will thrive alongside Applied Digital, because Nvidia’s chips will fill those data centers. Less risk, similar growth potential? It’s a no-brainer. Sometimes, the best investment is the one that doesn’t require a leap of faith.

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2026-02-09 12:12