TLDR
- Applied Digital will break ground on a $3 billion AI data center called “Polaris Forge 2” in North Dakota this September
- The company has secured power agreements and reports strong interest from potential clients including a U.S.-based hyperscaler
- Multiple analysts raised price targets with Lake Street lifting to $18 and Roth Capital increasing to $24
- Stock jumped over 16% on Monday following the data center announcement
- Q2 earnings beat expectations with adjusted EPS of -3 cents versus expected -16 cents
Applied Digital Corporation stock surged over 16% on Monday after the company announced plans for a massive new artificial intelligence data center. The $3 billion facility represents the company’s latest expansion in the rapidly growing AI infrastructure market.
The new data center, dubbed “Polaris Forge 2,” will be built in North Dakota with 280 megawatts of power capacity. Applied Digital plans to break ground in September 2025, with operations beginning in 2026 and full capacity reached by early 2027.
The company has already lined up the essential components for success. Power agreements are secured through Cass County Electric Cooperative. Multiple parties have expressed strong interest in leasing capacity at the facility.
At least one U.S.-based investment-grade hyperscaler has shown interest in the project. This early client interest helped drive investor confidence in Monday’s trading session.
Applied Digital’s stock price jumped from previous levels to close at $16.36. The company’s market capitalization now stands at approximately $4 billion.
Analyst Upgrades Drive Additional Momentum
Wall Street analysts have taken notice of Applied Digital’s expansion plans. Lake Street upgraded its price target to $18 while maintaining a buy rating on the stock.
Roth Capital went even further, raising its target to $24. The firm cited the company’s massive Ellendale lease deal as a key factor in the upgrade.
Compass Point also issued a new buy rating through analyst Ed Engel. The analyst noted the company’s strategic positioning in the high-performance computing market.
These upgrades come after Applied Digital’s recent financial performance exceeded expectations. The company reported Q2 earnings that beat analyst forecasts.
Applied Digital posted an adjusted loss of 3 cents per share. Analysts had expected a loss of 16 cents per share, making the actual results a pleasant surprise.
Revenue came in at $38.01 million for the quarter. This figure slightly exceeded the consensus estimate of $37.12 million.
Strong Revenue Growth Despite Profitability Challenges
Applied Digital’s revenue story continues to impress investors. The company more than doubled its revenue last year compared to the previous period.
Over the past two years, revenue has increased by 1,500%. This explosive growth reflects the surging demand for AI computing infrastructure.
The company maintains a quick ratio of 3.5, indicating strong liquidity. This financial strength provides flexibility for major capital investments like Polaris Forge 2.
However, profitability remains elusive for Applied Digital. The company currently operates with negative profit margins across key metrics.
Analysts don’t expect Applied Digital to achieve profitability until 2028. The company continues to prioritize growth over near-term earnings.
Applied Digital’s expansion builds on its existing relationship with CoreWeave. The completion of CoreWeave’s expanded third data center has boosted overall capacity in their partnership.
CoreWeave recently committed to an $11 billion lease agreement for Applied Digital’s Ellendale project. This long-term commitment provides revenue visibility for years ahead.
The partnership positions Applied Digital as a key player in hyperscale computing infrastructure. Hyperscale clients typically require massive amounts of computing power for AI applications.
Applied Digital’s trading volume reached 2.48 million shares on Monday. This represents elevated activity compared to the average daily volume of 50.17 million shares.
The stock hit a daily high of $16.91 before settling at the closing price. The 52-week range shows the stock trading between $3.01 and $16.92.
Applied Digital has secured power agreements and reports strong client interest for its new $3 billion Polaris Forge 2 data center, with groundbreaking scheduled for September 2025.
