Applied Digital Corporation (APLD): A Bull Case Theory 

We came across a bullish thesis on Applied Digital Corporation on stocks subreddit by GloriousLebron. In this article, we will summarize the bulls’ thesis on APLD. Applied Digital Corporation’s share was trading at $38.07 as of January 29th. APLD’s forward P/E was 526.32 according to Yahoo Finance.

Applied Digital Corporation designs, develops, and operates digital infrastructure solutions to high-performance computing (HPC) and artificial intelligence industries in North America. APLD has taken a significant step toward advancing Polaris Forge 2 (PF2) with the approval from its recent town hall and the subsequent 8-K filing, highlighting a $50 million senior secured promissory note to fund the acquisition of PF2 and initiate site work. The note carries an 8% interest rate for 12 months, which accrues rather than being paid in cash, and guarantees the lender a minimum 1.10x return.

Secured by PF2 assets, the note matures on February 1, 2026, unless prepaid. A key feature is the mandatory prepayment clause triggered if APLD signs 200 MW or more of PF2 leases, signaling that management anticipates an imminent lease, likely with a major hyperscaler or AI cloud provider. This structure effectively positions the note as bridge financing, reflecting confidence in near-term leasing activity and creating a path to de-risk the project quickly. The absence of warrants further underscores the short-term, targeted nature of this financing.

The potential lease serves as a major catalyst: once signed, the bridge note would be repaid, transforming PF2 from a speculative land-and-build project into a revenue-generating, leased asset. Such an outcome could attract long-term financing and materially re-rate APLD’s stock, particularly if the tenant is a well-known hyperscaler. In essence, APLD is strategically bridging PF2 to a transformative milestone, where successful lease execution could shift market perception from development risk to tangible, recurring revenue, presenting a compelling upside scenario for investors.

Previously we covered a bullish thesis on Applied Digital Corporation (APLD) by DoU92 in December 2024, which highlighted its AI-focused data center expansion and scalable high-performance computing infrastructure. The company’s stock price has appreciated approximately by 299.89% since our coverage as the thesis played out. The thesis still stands as APLD advances transformative projects. GloriousLebron shares a similar bullish view but emphasizes the near-term PF2 financing and potential hyperscaler leases as a key catalyst.

Applied Digital Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held APLD at the end of the third quarter which was 28 in the previous quarter. While we acknowledge the risk and potential of APLD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APLD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.