Let’s get one thing straight. When a stock that was basically a rounding error a year ago suddenly rockets up 540%, you don’t ask if it’s a “smart buy.” You ask who’s getting rich, and who’s about to get screwed. Applied Digital (APLD) is the poster child for the AI fever dream we’re all living in, a company that pivoted from the crypto grift to the AI grift just in time to catch the biggest hype wave in modern history.
And Wall Street is eating it up. You’ve got analysts doubling price targets to $40, talking about 15-year, $11 billion contracts like they’re handed out at the company picnic. I can just picture some fresh-faced MBA, staring at a screen where the APLD ticker just jumped another 16%, the green glow reflecting in his eyes as he whispers, "paradigm shift." Give me a break. This isn't a paradigm shift; it's a gold rush, and APLD is selling shovels made out of debt and hope.
They’re building these massive “AI factories” in North Dakota, powered by cheap hydro and cooled with fancy liquid systems. Sounds impressive, right? CEO Wes Cummins calls it a “modern-day picks and shovels” play. Cute. But what they don’t plaster on the press release is that this is the same company that, according to one analyst, “could barely rub two pennies together” 18 months ago. Now they’re playing with billions from Macquarie and other big-money players. Does that sound like a fundamentally sound business, or does it sound like a mad dash to build something, anything, before the AI bubble pops?
The $11 Billion Elephant in the Room
The entire bull case for APLD seems to hinge on one name: CoreWeave. They’re the anchor tenant, the big kahuna, the company that signed on for a staggering $11 billion worth of data center capacity over 15 years. This deal is being treated like the Rosetta Stone, proof that APLD is the real deal (Nvidia-Backed AI Data-Center Stock APLD Rockets on $11B Deal – Too Late to Buy?).
But let's unpack that. Pinning your entire future on a single client is risky. No, 'risky' doesn't cover it—it's catastrophically reckless. We’re talking about a company whose market cap is now floating around $9 billion, and its fate is tied to another company that also used to be a crypto miner before it saw the AI light. It’s like watching two guys who just quit their MLM scheme team up to build a rocket ship. You have to admire the ambition, but you probably don’t want to be on board for the launch.
And what exactly is this $11 billion contract? It’s revenue spread over 15 years. That’s a lifetime in the tech world. Quantum computing could make their entire setup obsolete in five. A rival could build bigger, better, cheaper facilities in three. Hell, CoreWeave could get bought out or go bust. This isn't guaranteed money; it's a long-term IOU from a rapidly changing industry. So why are people trading the stock as if that $11 billion is already sitting in APLD's bank account? It's because nobody is thinking long-term. They're thinking about the next quarter, the next earnings beat, the next analyst upgrade.
The company is still not profitable. Its price-to-sales ratio is a comical 38. Its stock volatility (beta) is over 6.7, meaning it swings around like a drunk on a pogo stick. This ain't an investment. It's a lottery ticket with a Nasdaq ticker symbol.
A Familiar Smell of Hype
If any of this feels familiar, it should. We saw the same playbook during the dot-com boom, the 2008 housing crisis, and the crypto explosion. First comes the legitimately cool new technology. Then come the storytellers, the companies that promise to build the infrastructure for that new world. Then comes the flood of easy money and breathless media coverage. And finally, the crash.
APLD is currently in the "breathless coverage" phase (Think It's Too Late to Buy Applied Digital (APLD) Stock? Here's the 1 Reason Why There's Still Time). Analysts at Roth Capital are slapping a $56 price target on it. Citizens and Needham are cheering from the sidelines. But dig a little deeper and you find the messy stuff. Short-seller reports from 2023 accused the company of exaggerating its AI pivot. There was a class-action lawsuit over alleged misstatements. The company, offcourse, denies everything. But where there’s smoke, there’s usually a dumpster fire of shareholder value.
And the company’s own strategy is a tell. CEO Wes Cummins is building facilities ahead of available power for 2027-2028. This is the definition of "build it and they will come." It’s the Field of Dreams, but for GPU servers. It might work. It might also leave them with billions of dollars worth of high-tech empty barns in the middle of nowhere if the demand curve flattens even slightly.
So, is it too late to buy? That’s the wrong question. The real question is: are you a gambler or an investor? An investor looks at the negative earnings, the high debt, the dependency on a single client, and the legal baggage and runs away screaming. A gambler sees the 540% run-up, the AI buzzwords, and the wild price targets and thinks, "maybe I can ride this wave just a little bit longer before it crashes." And honestly, in this market...
So, You Feeling Lucky, Punk?
Let’s be real. Buying Applied Digital right now isn't an investment thesis, it's a bet on pure, uncut momentum. You're not buying a company; you're buying a story, a narrative fueled by the insatiable hype around artificial intelligence. The fundamentals are a train wreck, the valuation is in outer space, and its entire future is leveraged on a single, massive deal in a sector that changes faster than you can say "disruption." If you want to throw some money at it for a thrill, go for it. Just don’t call it investing. Call it what it is: a trip to the casino. And remember, the house always wins.
