In 2025, Applied Digital (NASDAQ: APLD) has cemented its position as a standout performer in the burgeoning artificial intelligence (AI) infrastructure market, with its stock skyrocketing by nearly 350%. This surge is fueled by an insatiable demand for high-performance computing data centers, presenting a compelling long-term investment narrative despite its currently lofty valuation.
The year 2025 has unfolded as a pivotal period for investors, particularly those focused on the transformative power of artificial intelligence. While global tariff uncertainties and foreign institutional investor outflows have introduced volatility, the underlying demand for AI infrastructure has created undeniable “monster stock” opportunities. Companies at the forefront of powering the AI revolution, especially those in data center design and operation, are experiencing unprecedented growth.
For years, the spotlight in the AI chip sector shone primarily on giants like Nvidia, Broadcom, Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing (TSMC). These firms are critical for designing and manufacturing Graphics Processing Units (GPUs) – the backbone of modern AI. However, 2025 has seen a slight breather for these chip behemoths, as investors trimmed gains amid tariff negotiations and China exposure concerns. This shift has directed attention to the crucial infrastructure layer enabling AI: specialized data centers.
Applied Digital’s Explosive Growth and Strategic Positioning
Among the new favorites emerging from this landscape is Applied Digital, whose shares have seen an astronomical gain of almost 350% in 2025. This remarkable performance underscores its vital role in providing the physical backbone for AI workloads. Applied Digital specializes in designing, building, and operating data centers optimized for high-performance computing.
The company’s fiscal 2026 first quarter, which concluded on August 31, demonstrated this momentum with an impressive 84% year-over-year revenue increase, reaching $64.2 million. A significant portion of this revenue, $26.3 million, stemmed from the “tenant fit-out” of data center capacity leased by CoreWeave. While these fit-out services are a lower-margin, one-time business, they are strategically crucial as they pave the way for long-term, high-margin lease revenue.
The Massive Data Center Pipeline Fueling Future Returns
What truly sets Applied Digital apart is its substantial and rapidly expanding revenue pipeline. The company has significantly broadened its collaboration with CoreWeave, now encompassing the entire 400 megawatts (MW) of capacity under construction at its Polaris Forge One complex. This partnership alone represents a staggering $11 billion in data center leasing contracts spanning the next 15 years. Given CoreWeave’s own substantial revenue backlog, it’s highly probable that this fit-out request will extend to the remaining capacity.
Furthermore, Applied Digital projects that the Polaris Forge One campus could scale beyond 1 gigawatt (GW) from 2028 onward. The company has also initiated construction on Polaris Forge Two, a new data center campus with an initial capacity of 300 MW, also slated for potential expansion beyond 1 GW. With an active development pipeline of 4 GW of data center capacity, and new projects expected to break ground within the next six to twelve months, Applied Digital is strategically positioned for sustained expansion.
This aggressive expansion is directly addressing a critical market imbalance. According to a forecast from the Boston Consulting Group, the United States is projected to face a significant shortage of 45 GW in data center capacity by 2030, as reported by Data Center Frontier. Such a substantial supply-demand gap means that cloud hyperscalers and neocloud providers like CoreWeave are eager to secure capacity, making Applied Digital’s vast pipeline incredibly valuable.
CoreWeave: The Cloud AI Infrastructure Powerhouse
While Applied Digital builds the physical infrastructure, CoreWeave is making waves as a leading provider of AI cloud computing. Since its IPO in March 2025, CoreWeave (NASDAQ: CRWV) shares have rocketed by an astonishing 251%. Its business model allows generative AI developers efficient access to industry-leading hardware, particularly Nvidia GPUs, via the cloud. This circumvents the complexities and delays associated with directly acquiring, manufacturing, and integrating specialized AI training and inferencing clusters.
CoreWeave’s financial strength is underscored by an impressive backlog: $14.7 billion in remaining performance obligations, complemented by an additional $11.2 billion in committed contracts from a strategic deal with OpenAI. This combined backlog of roughly $25.9 billion indicates a robust revenue pipeline. Analysts generally foresee CoreWeave’s revenue tripling over the next two years, with a transition to profitability. This aligns with estimates from firms like McKinsey & Company, which anticipate nearly $7 trillion could be allocated toward AI infrastructure spending over the next five years, with hardware for AI data centers receiving the largest allocation, as cited by Business Insider.
Navigating Valuations: Opportunity or Overheating?
The phenomenal growth of both Applied Digital and CoreWeave inevitably brings their valuations into sharp focus. Applied Digital currently trades at 37 times sales, a premium reflecting its rapid expansion and promising pipeline. Similarly, CoreWeave’s price-to-sales ratio is significantly higher than more established data center infrastructure businesses like Oracle and Vertiv, with its multiple continuing to expand.
This presents a classic dilemma for long-term investors: Is the market pricing in all the good news, leaving little room for error? While such elevated valuations suggest a high conviction in continued price appreciation, the secular tailwinds driving AI infrastructure demand are robust. The persistent gap between demand and supply in data center capacity, coupled with the rapid evolution of AI, could allow these companies to outperform expectations for years to come.
However, it’s prudent to acknowledge the risks. The rapid price appreciation of companies like CoreWeave has led some to question if they are exhibiting characteristics of a “meme stock,” where speculation rather than fundamentals drives short-term movements. For fellow investors looking to build long-term wealth, patience is often key. While these companies are undoubtedly winners in the long run, smart investors might look for opportunities to “buy the dip” should shares experience a normalization in price, offering a more reasonable entry point.
Beyond the Hype: Long-Term Growth Catalysts
The broader market has seen other “multibagger” stocks in 2025, from India’s Swadeshi Industries and Leasing Ltd (2,395% gain) to Arun Is Abode Ltd (1,076%) and Blue Pearl Agriventures Ltd (596%). In the US, the 2023 tech recovery saw AI-driven companies like Twilio (up 55%), UiPath (up 95%), and Crowdstrike Holdings (up 144%) demonstrate significant growth, driven by AI innovation, customer expansion, robotic process automation, and cybersecurity demand.
These diverse success stories underscore a fundamental principle: investing in companies with enormous future potential and resilient business models, capable of navigating challenges like tariffs and market fluctuations, yields the most incredible gains over the long term. Companies like Shopify in e-commerce, On Holding in activewear, and Dutch Bros in coffee retail have also been highlighted as potential multi-decade hold opportunities.
For Applied Digital and CoreWeave, the catalysts extend beyond current partnerships and pipelines. The relentless advancement of AI technologies, the increasing data processing needs across industries, and the ongoing buildout of digital infrastructure globally (like Project Stargate in the U.S. and similar initiatives in the Middle East) ensure a sustained demand environment. While short-term market noise may test investors’ patience, the long-term trajectory for specialized AI infrastructure providers remains exceptionally bright.
