Should You Buy Applied Digital Stock Right Now?
The artificial intelligence (AI) infrastructure boom is in full swing. McKinsey projects data center investments will hit $7 trillion by 2030. Applied Digital (NASDAQ: APLD) is positioned to capitalize on this incredible spend, but after digging into its financials, I'm staying away for a few key reasons.
Applied Digital's debt skyrocketed from $44 million in the first quarter of 2024 to $2.6 billion today. The company's debt-to-equity ratio now exceeds 125% and is likely to continue to rise. Yes, the company is using debt to fuel growth, but Applied Digital is playing a dangerous game, considering the lion's share of future revenue depends on a single company.
The $16 billion in future lease revenue the company is banking on comes from just two companies -- and $11 billion of that is from CoreWeave, another high-growth company taking on extreme debt loads to scale rapidly.
Source Fool.com
