What Happened?
Shares of digital infrastructure provider Applied Digital (NASDAQ: APLD) jumped 15.6% in the afternoon session after the company announced plans for a new $3 billion AI data center campus and received a significant price target increase from analysts.
The company announced it plans to break ground in September 2025 on Polaris Forge 2, a $3 billion, 280-megawatt AI data center campus in North Dakota. This new facility is designed to support the increasing demand for high-performance computing and is expected to begin initial operations in 2026, reaching full capacity by early 2027. This ambitious expansion underscores the company's aggressive push into the AI infrastructure space.
Adding to the positive sentiment, Craig-Hallum raised its price target on Applied Digital to $23 from $12, maintaining a Buy rating. The firm noted that recent private transactions in the datacenter sector suggest the company's stock was undervalued. Other analysts also expressed bullish views, with Lake Street and Roth Capital raising their price targets to $18 and $24, respectively.
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What Is The Market Telling Us
Applied Digital’s shares are extremely volatile and have had 101 moves greater than 5% over the last year. But moves this big are rare even for Applied Digital and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 5.9% on the news that a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses. The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest. Further boosting confidence, the National Federation of Independent Business (NFIB) Small Business Optimism Index rose to a five-month high. This is a crucial indicator for the Business Services sector, as many of its companies cater to small and medium-sized enterprises. The combined positive data fueled a broad, "risk-on" sentiment, where investors favor economically sensitive sectors, leading to gains across IT services, staffing, and manufacturing.
Applied Digital is up 107% since the beginning of the year, and at $16.19 per share, has set a new 52-week high. Investors who bought $1,000 worth of Applied Digital’s shares 5 years ago would now be looking at an investment worth $269,754.
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