Wondering if it’s too late to purchase Applied Digital stock? Here’s one reason it’s still a good time.

Applied Digital Sees Growth Driven by AI Data Centers

Applied Digital’s stock has gained traction thanks to a growing demand for AI data centers.

The company recently secured a lease deal with CoreWeave and another major player, which is valued at roughly $16 billion over the next 15 years. This is considerable, especially as spending on data centers is on the rise. It’s likely that Applied Digital could see even larger contracts moving forward.

For context, the demand for data centers, fueled by artificial intelligence, has positively impacted Applied Digital (NASDAQ:APLD). Over the past year, the company’s stock price has surged by 269% through December 1st. While such impressive growth can make some investors hesitant—who wants to buy at a market peak, right?—Applied Digital may still have much room for expansion.

Throughout this year, Applied Digital has inked several agreements with hyperscalers. Notably, in June, CoreWeave entered into two 15-year leases, with expected revenue from these contracts amounting to about $7 billion. Then, in August, another lease agreement with CoreWeave was established, anticipating revenues around $11 billion.

In October, the company announced a fresh 15-year lease with a U.S.-based hyperscaler, which could bring in around $5 billion. Altogether, Applied Digital stands to make $16 billion from these agreements over the next 15 years. To put that in perspective, the company reported $219 million in revenue over the previous year, so this projected revenue increase of over $1 billion annually is substantial.

Furthermore, Applied Digital is ramping up its data center capacity. The efficiency of the build process is improving, with timelines reduced from 24 months to around 12-14 months. As AI firms continue to invest heavily, spending on data centers is forecasted to hit $1.1 trillion by 2029. Investors could potentially see Applied Digital securing even larger leases by 2026, positioning its stock to perform well in the market.

However, before diving into an investment in Applied Digital, there are a few things to consider. Analysts have compiled a list of top stock picks and, interestingly, Applied Digital doesn’t make the cut. In fact, there are 10 other stocks identified that appear to hold promising potential for remarkable returns in the near future.

For instance, if you had invested $1,000 in Netflix when it was recommended back in December 2004, you’d now have about $580,171! And with Nvidia, an investment of the same amount from April 2005 would have grown to around $1,084,986. It’s amazing how some stocks can perform, isn’t it?