Pinpointing stocks that Wall Street believes have huge upside is a great way to source ideas. While investors still need to do their own research, finding companies with lofty one-year average price targets can yield some great ideas.
One of those is data center specialist Applied Digital (NASDAQ: APLD). Right now, its stock trades for about $28.50 per share. However, the average price target is $45.27. That implies an upside of nearly 60%, and it looks like a compelling stock to consider.
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So, is Applied Digital a strong buy right now?
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Applied Digital builds and operates data centers. This has been a booming industry thanks to massive artificial intelligence (AI) demand and has caused demand for its properties to soar. Currently, it’s constructing several data centers whose computing capacities have already been contracted out, but there is still a long way to go on many of these projects.
Its Polaris Forge 1 location has 100 megawatts (MW) of computing power ready to go, but that’s only the first phase of this project. There will be two additional phases that will bring its total power to 400 MW. This facility has already been contracted out to CoreWeave, but it’s not the only location going up. The Polaris Forge 2 is starting construction and will provide an additional 200MW of computing capacity.
As these buildings are put up, more and more clients may seek to partner with Applied Digital, as they are providing turnkey solutions to place chips in and run AI workloads. This could be a compelling option for companies that want to get as much computing capacity as possible, leading to huge gains for Applied Digital shareholders.
However, there is a bit of a concern. Applied Digital is financing its buildout with debt, which should come as no surprise to real estate investors. Debt is…
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