Applied Digital Stock Worth Buying

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Applied Digital Stock Worth Buying

Is Applied Digital Stock Worth Buying?

Spending on AI infrastructure continues to rise and is in full swing. According to McKinsey, the data center investments are expected to reach $7 trillion by 2030.

One company that stands to gain from this massive spending is Applied Digital (APLD). Based on the company's technicals, there's a good chance of massive upside in the Applied Digital stock price.

Applied Digital Has A Lot Of Debt

A quick look at Applied Digital shows their debt now sits at $2.6 billion. Back in Q1 2024, the same debt was $44 million, which tells us that debts keep growing!

The debt-to-equity ratio of Applied Digital is now sitting at 125% with more upside expected. But another way to look at it is that Applied Digital is using the debt to fuel growth.

Applied Digital basically builds, runs, and owns a lot of data centers. Also, the company provides GPU-based cloud services for HPC and AI applications.

There's no doubt that Applied Digital stands to gain a lot if its investments in the AI field pan out. At the same time, we can't ignore the fact that Applied Digital is in a dangerous position with such high debt levels.

But the company is also hoping to get future lease revenue worth $16 billion. Around $11 billion will come from CoreWeave, which is another growth company with a lot of debt.

So, if the CoreWave fails to deliver on its obligations, it would spell bad news for the Applied Digital stock.

Also, if Applied Digital fails to complete itsconstruction targets on time, it would also be trouble for them. It would mean CoreWeave can walk away without any penalty from its leases if Applied Digital is not on schedule.

Everyone knows that any construction project can experience delays, and that's not good news for Applied Digital.

But if everything goes right, it would mean a huge upside in the Applied Digital stock price. In a nutshell, buying the Applied Digital stock is a high-risk and high-reward scenario that might not be ideal for everyone.

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