APLD Accelerates Hyperscale Growth With $5B Expansion Backing

Applied Digital APLD is advancing an ambitious expansion strategy to support hyperscale infrastructure, anchored by its Ellendale campus build-out and strengthened by major institutional partnerships. In third-quarter fiscal 2025, APLD secured a transformative investment commitment of up to $5 billion from Macquarie Asset Management, alongside a $375 million financing arrangement with SMBC. These transactions mark a pivotal endorsement of APLD’s infrastructure pipeline and scalability.

The Ellendale development is central to APLD’s next-generation data center vision. The first building, offering 100 megawatts of critical IT load, is on track to go live by the end of 2025. Construction on the second and third buildings, each adding 150 megawatts, is underway and in planning stages respectively, with power and supply chain secured. Collectively, the campus is expected to scale beyond 400 megawatts of initial IT capacity. Discussions with hyperscale tenants are active, with management emphasizing demand across all major cloud customers.

This expansion aligns with APLD’s broader strategic intent to become a high-performance computing (HPC) infrastructure leader. To that end, the company has also begun exploring strategic alternatives for its Cloud Services business, citing potential friction with hyperscale customers and a longer-term vision of transitioning to a REIT structure. With its construction progressing on schedule and backed by institutional capital, APLD is positioning itself as a serious contender in the future of AI-driven, large-scale data hosting.

Competition Update

CoreWeave CRWV and Equinix EQIX are two key competitors to APLD making significant hyperscale infrastructure investments. CoreWeave, a fast-growing AI-focused cloud provider, recently raised over $1 billion to expand its GPU-powered data center footprint. It is rapidly scaling capacity to meet AI workload demand, positioning itself as a major alternative to traditional hyperscalers.

In October 2024, Equinix announced a joint venture with GIC and CPP Investments to raise over $15 billion for expanding its xScale data centers in the United States, adding more than 1.5 gigawatts of capacity to meet growing AI and cloud demands. Equinix's strategic move underscores its commitment to supporting hyperscale clients. With this initiative, Equinix solidifies its position as a key player in the evolving digital infrastructure landscape.

APLD’s Price Performance, Valuation and Estimates

Shares of APLD have surged 67.1% in the year-to-date period against the industry’s decline of 5%.

From a valuation standpoint, Applied Digital trades at a forward price-to-earnings ratio of 12.85, above the industry average as well as higher than its five-year median of 1.42. APLD carries a Value Score of F.

The Zacks Consensus Estimate for Applied Digitals’ fiscal 2026 earnings implies a 73.6% rise year over year.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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