TLDRs;
- Applied Digital shares swung sharply as Texas Capital launched coverage with a bullish $42 target.
- Investors are pricing in future power capacity before most AI data centers become fully operational.
- Long-term hyperscaler leases support the story, but construction and financing risks remain significant.
- Earnings and new contract updates are likely to drive the next major move in APLD stock.
Applied Digital Corp. (NASDAQ: APLD) stock experienced a turbulent trading session after Texas Capital initiated coverage with a Buy rating and a $42 price target, highlighting optimism around the company’s role in the fast-growing AI data-center market.
Shares ended the day down about 1.1% at $35.06, but the closing figure masked wide intraday swings, with the stock moving between roughly $32 and $38 as traders reacted to the new analyst outlook and ongoing uncertainty about execution and financing.
Volume surged to more than 40 million shares, signaling strong speculative interest and reinforcing the idea that Applied Digital has become a proxy for the broader race to build infrastructure capable of supporting next-generation artificial intelligence workloads. In this environment, even modest pieces of news can trigger sharp price movements, as investors attempt to position ahead of long-term capacity coming online.
Applied Digital Corporation, APLD
Power and AI Expansion
At the heart of the bullish thesis is Applied Digital’s strategy to develop what it calls “AI factories”, large-scale data center campuses designed specifically for high-performance computing used in training and running advanced AI models. The company is focused on securing access to land, power, and cooling in regions where electricity is relatively abundant and affordable, particularly in North Dakota.
Texas Capital analyst Derrick Whitfield pointed to the firm’s portfolio of power assets and its waterless cooling technology as key advantages. According to the company, its land and power pipeline could ultimately support up to 4.3 gigawatts of capacity, a scale that would place it among the more significant infrastructure players serving hyperscalers and specialized AI cloud providers.
The market is increasingly valuing these future megawatts well before facilities are fully built. For investors, the central question is not only how much capacity Applied Digital can develop, but how quickly it can do so and how effectively it can lock in long-term tenants on attractive terms.
Leases and Long-Term Vision
Applied Digital has already made progress on the commercial side. In its most recent quarterly update, the company disclosed that about 600 megawatts have been leased across two campuses. This includes a 400-megawatt buildout for CoreWeave and a nearly 15-year, 200-megawatt agreement with another investment-grade hyperscaler. These contracts provide a degree of revenue visibility and help support the narrative that demand for AI-focused computing space remains strong.
To fund construction and expansion, the company has turned to sizable financing packages, including a multi-billion-dollar private notes offering and preferred equity arrangements with a major global asset manager. These moves have strengthened the balance sheet but also introduced leverage and financing costs that could pressure returns if projects face delays or if market conditions tighten.
The stock’s current valuation reflects confidence that these campuses will be delivered on time and that tenants will scale usage as expected. Any slippage in timelines, cost overruns, or changes in customer demand could quickly alter that perception.
Risks and Upcoming Catalysts
Despite the optimistic analyst call, the investment case is far from risk-free. Building large, power-hungry data centers is capital intensive and complex. Regulatory approvals, grid interconnections, supply-chain constraints, and rising interest rates all have the potential to slow progress or inflate costs. For a company whose story is built on future cash flows, timing is critical.
Another challenge is the lack of near-term corporate events. With no major announcements currently scheduled on the investor calendar, traders are closely watching regulatory filings, construction milestones, and any hints of additional lease signings or financing arrangements. In such a news-light environment, sentiment can shift quickly, contributing to the kind of volatility seen in the latest session.
The next widely anticipated catalyst is the company’s upcoming earnings report, which market trackers currently expect in mid-April. While the date has not been formally confirmed, the results and accompanying guidance could provide fresh insight into project progress, capital spending, and customer demand.
For now, Applied Digital sits at the intersection of powerful long-term trends and short-term uncertainty. The Buy rating and $42 price target underscore the potential upside if execution goes smoothly, but the sharp intraday swings show that investors remain acutely aware of the risks involved in building the physical backbone of the AI revolution.
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