Applied Digital Stock Soars 31% in Single Day—Here’s the Fuel Behind the Rocket

Wall Street's latest dopamine hit comes courtesy of Applied Digital (NASDAQ: APLD), with shares screaming up 31% in a classic 'buy the rumor' frenzy. While the suits scramble for explanations, the charts tell the real story—a perfect storm of hyperscale demand and speculative froth.

The AI Infrastructure Play Nobody Saw Coming

Forgot bitcoin miners—data center operators are the new darlings of momentum traders. Applied Digital's pivot to high-performance computing infrastructure put gas in the tank right as hedge funds went hunting for the next NVIDIA proxy.

Short Squeeze or Sustainable Growth?

Let's be real—a 31% single-day pop reeks of gamma exposure. But with three straight quarters of revenue doubling and actual contracts with cloud providers (unlike certain metaverse stocks we could name), this might be more than just meme-stock theater.

The Bottom Line for Crypto-Natives

While traditional investors hyperventilate over a single green day, blockchain builders recognize the pattern—Applied Digital's surge mirrors 2021's DeFi summer, where infrastructure plays outlasted the hype cycle. Just remember: in both crypto and equities, the house always takes its cut eventually.

Applied Digital gets a big win

Applied Digital announced that its partnerexercised a lease option for an additional 150 MW of computing power, bringing the total contract value to $11 billion. This is the maximum the company can provide from its Ellendale, North Dakota, location.

The analyst Greg Miller ofmaintained his buy rating on the stock after the news and raised his price target to $16.

Big tech continues its AI spend

The news comes as major AI players in big tech likeandrelease their earnings results, showing no signs of reining in their AI capital expenditures (capex). Quite the opposite.

Image source: Getty Images.

Meta nearly doubled its capex year over year while Microsoft grew its capex by 22% to $17.1 billion and plans to increase that to $30 billion this quarter. That figure was 60% more than analysts expected.

Applied is growing fast, but the future is uncertain

While I think the company will continue to perform well in the NEAR term, I have significant concerns about the business model long-term. The Metas and Microsofts of the world may be leaning on specialty cloud providers at the moment to keep up with the rapid growth of AI demand, but they are also heavily investing in building their own facilities. I don't see a strong moat for Applied Digital that makes me think this is a long-term hold.