Shares of APPLIED DIGITAL CORP (APLD) surged 7.48% on Thursday, as investors bet on the company's potential to capitalize on the soaring demand for computing power from artificial intelligence (AI) and data center companies.
According to analysts at Barron's, the industry is facing a "severe shortage" of data center capacity in the United States, with power being a key constraint. To accommodate the growing number of AI chips being sold, the industry will need new data center capacity equivalent to 10 gigawatts of electric power, but it's currently building only about half of that.
This shortage has created opportunities for companies like APPLIED DIGITAL, which operates infrastructure originally designed for cryptocurrency mining. As Barron's notes, these crypto mining sites can offer a three- or four-year time advantage relative to connecting a traditional data center to the grid, making them valuable assets for AI and cloud computing companies eager to power up their chips quickly.
