Call Traders Blast Applied Digital Stock Amid 3-Year Highs

Applied Digital Corp (APLD) shares are up 29.2% to $13.24 following the announcement of a 15-year, $7 billion deal with CoreWeave (CRWV) to build AI data centers, both of which are backed by Nvidia (NVDA); options activity has surged to six times the typical daily volume, with call buying heavily favored, driving the stock to three-year highs and a 73% gain since the start of 2025. While analysts have raised price targets, the consensus 12-month target of $13.55 suggests further upside potential, especially given the high short interest representing 35.8% of the available float.

Analysis

Applied Digital Corp (APLD) has experienced a significant surge in its stock price, last seen up 29.2% at $13.24, driven by the announcement of a substantial 15-year, $7 billion agreement with cloud service provider CoreWeave (CRWV) to construct artificial intelligence data centers; notably, both entities receive backing from Nvidia (NVDA). This development has propelled APLD to three-year highs, following a 48% increase on Monday and contributing to a 73% year-to-date gain. The market's enthusiastic response is further evidenced by extraordinary options activity, with 489,000 contracts traded – six times the typical daily volume – of which 392,000 were calls, indicating strong bullish sentiment and focusing on the weekly 6/6 13-strike and 15-strike calls where new positions are opening. While several analysts have revised their price targets upwards in response to the deal, the current 12-month consensus target of $13.55 offers only a slim premium to current trading levels, suggesting potential headroom for further positive revisions. Compounding the upside potential, a high short interest representing 35.8% of APLD's available float creates conditions for a potential short squeeze, which could further amplify upward price movements given sustained positive sentiment.

Key Decisions for Investors

• The substantial CoreWeave deal and strategic Nvidia backing present a strong growth narrative for Applied Digital in the AI data center sector, potentially justifying a bullish outlook.
• Investors should closely watch for further analyst price target revisions upwards from the current modest consensus, as the high short interest could fuel additional gains if sustained buying pressure forces shorts to cover.
• Despite the positive catalysts, the recent sharp rally to three-year highs warrants caution; traders might consider the elevated options premiums and potential for volatility, while long-term investors should assess entry points carefully.