The artificial intelligence (AI) boom is here to stay, with tech giants showing no signs of slowing down their investments in AI and the data center infrastructure needed to power it. Meta Platforms (META) is proof of that. The company turned heads on April 30 with a strong earnings beat and a bold move to boost its capital expenditure forecast to as high as $72 billion. 

The social media giant unveiled a capex forecast ranging from $64 billion to $72 billion for the year, a significant leap from its previous projection of $60 billion to $65 billion. A hefty slice of this spending will be directed toward data centers powering Meta’s AI ambitions.

Meta’s decision to ramp up spending shows it’s willing to bet big on AI. And as companies like Meta pour billions into AI infrastructure, the demand for high-performance, AI-optimized data centers is only set to accelerate. Thus, against this backdrop, now may be an opportune time to take a closer look at Applied Digital (APLD), a rising data center stock poised to benefit from this surging demand. 

About Applied Digital Stock

Applied Digital (APLD) builds and operates digital infrastructure across North America, focusing on high-performance computing (HPC) and AI. Its business spans three segments: Data Center Hosting, Cloud Services, and HPC Hosting. The company supports a range of clients, from crypto miners to enterprises running AI and machine learning workloads, offering GPU-powered computing solutions and custom-built data centers for intensive computing tasks.

With a market cap around $1.2 billion, this digital infrastructure player has faced a rough patch in 2025, with shares sliding 33.8% year-to-date, well worse than the S&P 500 Index’s ($SPX ) more modest 4.9% dip. But take a step back, and the longer-term picture tells a different story. Over the past 52 weeks, Applied Digital has delivered a striking 54% return, far outpacing the broader market’s 8% gain.

At 7.19 times sales, APLD’s current valuation seems steep compared to the sector median of 2.81x. However, when viewed in light of its own five-year average of 49.98x, the stock starts to look like a bargain, offering a substantial discount relative to its historical valuations.

A Closer Look at Applied Digital’s Q3 Performance 

Applied Digital’s fiscal 2025 third quarter earnings report, released on April 14, triggered a sharp market reaction, with the stock plunging over 35% in the very next trading session as the results missed Wall Street’s expectations. While revenue climbed a solid 22% year-over-year to $52.9 million, driven largely by explosive growth in its cloud services segment, it still came in well short of analysts’ $62.9 million forecast. 

The company also posted a narrower loss of $0.16 per share compared to a $0.52 per share loss a year earlier, but that too fell below expectations, with analysts projecting a smaller $0.11 loss per share. Digging further into its business segments, Applied Digital’s Data Center Hosting Business brought in $35.2 million during the quarter, a 7% decline from the $37.8 million reported a year earlier. 

In contrast, the real standout was the Cloud Services Business, where revenue skyrocketed a stunning 220% year-over-year to $17.8 million, fueled by surging demand for high-performance computing tied to AI and machine learning workloads. 

As demand for data centers heats up, the company hinted toward a potential transformation into a pure-play data center REIT, a move designed to sharpen its operational focus and unlock long-term value. As part of this plan, Applied intends to separate its Cloud Services Business, positioning itself to better capitalize on its core strengths in infrastructure while giving investors a clearer view of its growth potential.

Meanwhile, analysts tracking Applied Digital project the company’s bottom line to steadily improve, projecting its loss to shrink by 24.4% in fiscal 2025, followed by a dramatic 70.7% improvement in fiscal 2026.

What Do Analysts Expect for Applied Digital Stock?

Despite the company’s less-than-stellar Q3 performance, Wall Street still appears highly bullish on APLD stock, maintaining a consensus rating of “Strong Buy” overall. Of the nine analysts offering recommendations, eight advise a “Strong Buy,” and the remaining one maintains a “Moderate Buy.” The average analyst price target of $9.94 indicates potential upside of 92.3%, while the Street-high price target of $18 suggests that APLD could rally as much as 250% from here.