A few years ago, there were not enough chips for companies investing in artificial intelligence (AI). Today, chips are no longer a problem. The main bottleneck is securing access to electricity for new data centers.
This is a significant opportunity for data center builders like Applied Digital (APLD 4.59%). The stock has climbed more than 300% in 2025.
If you have extra cash you can afford to commit to a long-term investing strategy, this stock offers substantial upside.
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Why buy Applied Digital stock
The latest research from Morgan Stanley projects a 47-gigawatt shortfall in available electricity for data centers over the next several years. Applied Digital has two data center sites in North Dakota, with other projects planned for the long term. It currently has 286 megawatts operational in North Dakota, with a total of 4 gigawatts in its active development pipeline.
NASDAQ: APLD
Key Data Points
Applied Digital is only addressing a fraction of the projected energy shortfall. However, the high demand creates tremendous profit potential for the business.
The company reported an 84% year-over-year increase in revenue in the recent quarter. It has already signed a multibillion-dollar deal with CoreWeave but has been in active talks with other hyperscalers.
Each megawatt of data center power is worth several million dollars. The deal with CoreWeave is expected to bring Applied Digital's annual operating profit to $500 million, with the potential to grow that to $1 billion in the coming years through additional deals. With the stock's market cap at just under $10 billion, which implies a conservative 10 times multiple on future operating profit, investors may be able to multiply their investments in this company over the next decade and beyond.
