Applied Digital Stock Surges 9% After Analyst Price Target Upgrade

Applied Digital’s stock experienced a significant surge on Thursday, with a rise of 9% during the trading session. At one point, shares soared as much as 10.7% earlier in the day, reflecting strong investor enthusiasm. In contrast, the broader market indices, including the S&P 500 and the Nasdaq Composite, saw more modest gains of 0.6% and 0.9%, respectively. This rally in Applied Digital’s stock can be largely attributed to a substantial increase in its price target from a respected analyst.

Analyst Upgrade Drives Momentum

Before the market opened on Thursday, Craig-Hallum released an updated report on Applied Digital, reiterating a buy rating for the stock. The firm raised its one-year price target from $37 to $39 per share. This revision followed the announcement that Applied Digital had secured a new $5 billion data center services lease, marking a significant milestone for the company. Although details regarding the identity of the new customer remain undisclosed, the partnership is expected to enhance Applied Digital’s revenue potential.

Year to date, Applied Digital’s stock has gained an impressive 337%, reflecting its strong performance amid rising demand for data center services, particularly in relation to artificial intelligence (AI) capabilities. The company’s focus on AI computation is poised to play a crucial role in its growth trajectory as more industries seek advanced computing solutions.

Market Outlook and Valuation Concerns

Despite the recent volatility in trading throughout 2025, Applied Digital has consistently delivered explosive gains. Investors are optimistic about the company’s prospects, largely due to the increasing demand for AI solutions. However, valuation remains a concern. Following the recent price rally, the company is now valued at approximately 31 times its expected sales for the year, which could raise questions among investors regarding future profitability.

While it is clear that AI data centers are set to be integral in advancing technology across various sectors, uncertainties persist regarding the short-term growth trajectory of the AI market. Investors are advised to consider these factors carefully as they assess the long-term sustainability of Applied Digital’s remarkable gains.