Applied Digital is strategically positioned to capitalize on the increasing demand for data center capacity, a trend that is becoming even more critical in the face of current market dynamics. With a stock that has surged over 300% in 2025, the company is making waves by addressing a potential energy shortfall projected at 47 gigawatts for data centers over the coming years, according to recent research from Morgan Stanley.
The demand for computing power, particularly due to advancements in artificial intelligence (AI), has shifted from a chip shortage to a more pressing issue: securing electricity for new data centers. Applied Digital operates two sites in North Dakota, boasting 286 megawatts of operational capacity, with an ambitious pipeline that aims to expand to a total of 4 gigawatts.
This burgeoning demand presents a significant profit opportunity for Applied Digital as it taps into a market where each megawatt of data center power can generate millions of dollars in revenue. Notably, the company has reported an impressive 84% year-over-year revenue increase in its most recent quarter and has secured a multibillion-dollar agreement with CoreWeave, indicating strong growth potential. Projections suggest that this deal could elevate Applied Digital’s annual operating profit to $500 million, with the possibility of reaching $1 billion through further collaborations.
Currently, the stock is trading at a conservative multiple of around 10 times its expected operating profit over the next five years, suggesting that there could be significant upside for investors willing to adopt a long-term strategy.
However, potential investors should be aware that Applied Digital is not among the ten top stocks recommended by the Motley Fool’s Stock Advisor analyst team, which has highlighted selections that could yield substantial returns. The average ROI for the Stock Advisor recommendations has been an exceptional 971%, showcasing the potential benefits of their advice.
As the data center industry continues to grow, Applied Digital’s focus on meeting energy demands could position it as a leader in the market. For investors looking for opportunities in the tech and energy sectors, this company is certainly one to watch as it navigates through an evolving landscape.