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Applied Digital (APLD) has surged more than 300% in 2025 as investors prize companies that can supply power-hungry data centers amid a Morgan Stanley-flagged 47 GW shortfall in available electricity; the company currently operates 286 MW in North Dakota with a 4 GW development pipeline and reported revenue growth of 84% year-over-year. A multibillion-dollar deal with CoreWeave is expected to lift annual operating profit to about $500 million with upside to $1 billion as more hyperscaler contracts are signed, and the company’s sub-$10 billion market cap implies roughly a 10x multiple on that forward operating profit—suggesting significant upside if execution and power access scale as planned. However, the thesis depends on Applied Digital’s ability to secure additional long-term power and close more large deals, and notable stock-picking services have not included APLD in their current top-10 recommendations.

Analysis

Morgan Stanley projects a 47-gigawatt shortfall in electricity for data centers over the coming years, positioning infrastructure sellers as strategic beneficiaries; Applied Digital (APLD) currently has 286 MW operational in North Dakota and a 4 GW active development pipeline, and the stock has risen more than 300% in 2025 on that market narrative. The company reported an 84% year-over-year revenue increase in the most recent quarter and has signed a multibillion-dollar deal with CoreWeave that management expects will drive annual operating profit to roughly $500 million with upside toward $1 billion as additional hyperscaler deals are secured. With a market capitalization just under $10 billion, the stock trades at about a 10x multiple on the lower-end operating-profit projection, implying meaningful upside if execution and power procurement scale as forecasted. Key risks are execution- and supply-related: the company is addressing only a fraction of the projected energy shortfall, so its valuation is highly sensitive to confirmation of long-term electricity contracts, additional hyperscaler commitments and predictable margin conversion, and noted stock-picking services have not included APLD in their current top-10s, signaling some institutional caution.

Key Decisions for Investors

• Consider a measured, size-limited position in APLD to capture upside from the CoreWeave contract and the 4 GW pipeline while limiting exposure to execution and power-supply risk
• Require re-rating catalysts before adding: confirmed long-term power contracts, additional hyperscaler commitments beyond CoreWeave, and evidence of operating-profit conversion toward the $500m–$1bn targets
• If risk tolerance is low, wait for demonstrable contract-to-revenue delivery or use a hedged approach since the sub-$10bn market cap already implies a favorable 10x multiple and valuation is vulnerable to setbacks