Applied Digital has “more near-term catalysts than the market expects,” says Needham

Applied Digital is up in early trading as Needham & Co. analyst John Todaro bangs the table on the Nvidia-backed data center upstart’s ability to secure energy to expand its operations.

In a note to clients, the analyst reiterated his “buy” rating while “calling attention to the possibility of more near-term catalysts than the market expects.”

The company recently announced a $5 billion, 15-year AI factory lease from a “US based investment grade hyperscaler” at its Polaris Forge 2 campus, which came on the heels of comments from its earnings call earlier this month about negotiations with two additional hyperscalers for two new locations.

The AI boom is resource constrained in a variety of ways, including power. But after a recent conversation with Applied Digital’s management, Todaro thinks “there is a real pathway to source more power than previously thought,” writing, “APLD has received numerous calls from operators over the last few weeks offering stranded power; APLD is fairly confident it can continuously source power over the next five years.”

The Trump administration is reportedly pushing for a speedier approval process for data centers to connect to the power grid.

Todaro thinks the company’s goal of net operating income of $1 billion over the next five years “could prove conservative given the ongoing demand and ability to source available power.”

Wall Street is universally bullish on Applied Digital, with all 10 analysts who cover the stock having a “buy” (or equivalent) rating.