To The Moon

$APPLIED DIGITAL CORP(APLD)$ $CoreWeave, Inc.(CRWV)$ 🚨🤖💥 Applied Digital ($APLD): $7B AI Catalyst or Just a Compute Mirage? 💥🤖🚨

On 3 June 2025, Applied Digital ($APLD) erupted, soaring as much as 54% after announcing a transformative $7 billion, 15-year lease agreement with Nvidia-backed CoreWeave. As a data centre operator pivoting into the epicentre of AI infrastructure, I see APLD carving a niche in the high-stakes neocloud race. But with a sharp pre-market pullback of 5.13% on 4 June following a shelf offering announcement, the question looms: is this a golden entry point or a fleeting rally?

Below, I dissect the technicals, fundamentals, macro context, and strategic catalysts to deliver a clear-eyed view of APLD’s trajectory and whether $20 remains within reach.

📡 Strategic Evolution: From Data Centres to AI Compute Powerhouse

Applied Digital is no longer just a landlord for server racks. The CoreWeave deal, securing 250 MW of critical IT load for AI and high-performance computing (HPC) at its Ellendale, North Dakota campus, positions APLD as a linchpin in the AI infrastructure ecosystem. CEO Wes Cummins frames this as a “strategic expansion into advanced compute infrastructure,” signalling a pivot toward a real estate investment trust (REIT) model tailored for AI-driven compute.

With CoreWeave holding an option for an additional 150 MW and the campus scalable to 1 GW, APLD is betting big on the exponential demand for GPU-intensive workloads. This isn’t just a lease, it’s a structural shift toward becoming a programmable platform for next-gen AI applications.

📊 Last Quarter Snapshot: Laying the Foundation

In its Q3 2025 earnings (reported March 2025), Applied Digital showcased resilience amid its strategic pivot:

• Revenue: $42.3M, up 22% YoY, driven by a 200% surge in cloud services

• Net Loss: Widened to $18.7M from $12.4M, reflecting heavy data centre investment

• Cash Burn: Operating cash flow remained negative at $25.6M

• Financing: Secured $375M from SMBC in February 2025 to fund Ellendale’s initial buildout

The CoreWeave deal validates this strategy, locking in long-duration, high-quality revenue streams.

📈 Technical Setup: Oversold, Bullish Confluence

After surging to $10.54, APLD retraced to $10.08 pre-market on 4 June, down 5.13% as dilution fears emerged.

Key levels and signals:

• RSI(6): 18.51, deeply oversold!

• EMA 50/200-day crossover is bullish ($8.50 > $7.80)

• Bull flag breakout confirmed on 3 June, now pulling back to the 38.2% Fibonacci level at $9.80

• Volume: Institutional block activity exploded, topping 1.24B shares on Polygon data

Trade setup: A high-reward swing long at $9.60–$9.80 with confirmation. Scalpers targeting $8.17 can use that zone as secondary support.

🧨 Short Interest: Volatility Loaded

• Open Short Interest: 117.3M shares

• Short Ratio: 6.98% of float

• Days to Cover: 10.94, very elevated

• Daily Short Vol (2 June): 16.75M on 239.7M volume

This is a squeeze setup waiting for a spark. With RSI oversold and call volume rising, shorts could be trapped if momentum returns. Notably, OTM $15 July calls surged 3x in volume post-CoreWeave deal.

📉 Dilution Overhang: Reality Check

Despite the momentum, Applied filed:

• A mixed shelf offering (size TBD)

• Registration for resale of up to 39.7 million shares by selling stockholders

Needham raised its price target from $10 to $12 and maintained a Buy, while Craig-Hallum and HC Wainwright echoed bullish sentiment. Still, these filings sparked concern, especially following a $150M convertible preferred equity facility.

🌍 Macro Tailwinds: AI Infrastructure in Expansion Mode

The macro backdrop strengthens APLD’s long-term thesis:

• Fed pause in June stabilises borrowing costs

• Inflation easing to 2.8% supports tech capex

• AI infrastructure expected to grow at 35% CAGR to 2030

CoreWeave, backed by Nvidia’s 24.2M-share stake, represents the “neocloud” trend. These firms rent GPU infrastructure to AI startups and defence applications, demand that APLD is structurally positioned to serve.

📊 Comparative Positioning

While giants like Equinix ($EQIX) and Digital Realty ($DLR) trade at over 20x EV/EBITDA, APLD’s GPU-aligned footprint offers 4x the revenue upside per megawatt at a fraction of the multiple. It’s a rare asymmetric bet on compute land becoming the new oil.

🧩 Strategic Catalysts Beyond CoreWeave

• REIT Conversion: Adds tax efficiency and widens institutional ownership

• Ellendale Expansion: 100 MW due Q4 2025, followed by two 150 MW blocks

• Client Pipeline: OpenAI, which inked a $4B deal with CoreWeave, may be an indirect tenant

• Funding runway: $375M SMBC facility + $150M convertible equity

📌 Key Risks

• Execution: Delays in Ellendale build could spook CoreWeave or derail timelines

• Competition: Digital Realty and Equinix remain dominant in hyperscaler real estate

• Dilution: The 39.7M share resale and shelf registration loom as liquidity overhangs

• Macros: Tariffs on steel and FX volatility could pressure build costs and margins

📍 Price Targets & Valuation

• Average Analyst Target: $12.50 (23% upside from $10.14)

• High Target: $15 (post-CoreWeave from HC Wainwright)

• Bull Case: $20 achievable if revenue hits $500M run-rate and REIT status is secured

📅 Forward Guidance

• FY26 Revenue Outlook: $200M–$250M

• Margins: Targeting >30% gross margins

• CapEx: $100M earmarked for Ellendale in 2026

📋 Watchlist for Market Movers

1. Q4 2025 delivery of 100 MW Ellendale facility

2. Confirmation of CoreWeave’s 150 MW expansion

3. Progress on REIT status and IRS approval

4. Short covering spikes or dark pool accumulation

5. Fed decisions or tariff escalations impacting capex

Conclusion: The Compute Land Rush

Applied Digital’s $7B CoreWeave agreement cements its role in the AI gold rush, not as a chipmaker, but as the company controlling where those chips get deployed. In this AI arms race, the ones who own the land, not just the silicon, will dictate who wins.

$20 isn’t a fantasy, it’s a forward-looking valuation if APLD executes cleanly, completes its REIT transition, and lands just one more hyperscaler.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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