Meta Platforms (NASDAQ: META) has made headlines again, increasing its capital expenditure (CapEx) forecast to as high as $72 billion, a significant jump from its previous guidance. This bold move demonstrates Meta’s commitment to investing in artificial intelligence (AI) and the data center infrastructure that powers it. The increase in Meta’s CapEx is primarily aimed at bolstering the company’s AI capabilities, which require advanced, high-performance computing data centers.
Meta’s Commitment to AI and Data Centers
On April 30, Meta posted strong earnings, showcasing a solid beat on expectations. In tandem, the company raised its CapEx forecast to a range of $64 billion to $72 billion for the year, an increase from its initial projection of $60 billion to $65 billion. A substantial portion of this investment will go toward expanding data centers that support AI-driven initiatives.
Meta’s decision to significantly boost its spending underscores the company’s long-term belief in AI’s transformative potential. With companies like Meta leading the charge, the demand for advanced data centers—particularly those optimized for AI and machine learning workloads—is only set to rise. This provides a unique investment opportunity in the data center sector, particularly for companies like Applied Digital (NASDAQ: APLD).
Applied Digital: A Rising Data Center Stock
Applied Digital (NASDAQ: APLD) is well-positioned to capitalize on the growing demand for high-performance data centers. The company specializes in digital infrastructure across North America, with a focus on high-performance computing (HPC) and AI. Applied Digital’s services include data center hosting, cloud services, and HPC hosting, supporting a range of clients from crypto miners to enterprises involved in AI workloads.
Despite facing challenges in 2025, including a 33.8% year-to-date decline, the company has shown strong performance over the past year, delivering a 54% return, significantly outperforming the broader market. Although Applied Digital’s current valuation seems steep compared to the sector, its historical performance indicates that the stock may offer an attractive opportunity.
Q3 Performance and Transformation Plans
In its fiscal 2025 Q3 earnings report, Applied Digital saw a 22% increase in revenue year-over-year, reaching $52.9 million. The growth was primarily driven by its cloud services segment, which saw a 220% increase in revenue. However, the company’s data center hosting segment experienced a 7% decline in revenue, bringing in $35.2 million for the quarter.
The market responded negatively to the earnings report, with the stock plummeting 35%. However, there is a silver lining. Applied Digital hinted at plans to transform into a pure-play data center REIT (Real Estate Investment Trust), a move designed to streamline operations and unlock long-term value. The company plans to separate its cloud services business, focusing on its core infrastructure strengths.
Analysts’ Outlook for Applied Digital Stock
Despite the less-than-ideal Q3 performance, analysts remain optimistic about Applied Digital’s prospects. The stock holds a consensus rating of “Strong Buy,” with eight out of nine analysts recommending it as a strong buy. The average analyst price target of $9.94 suggests a potential upside of 92.3%. The highest price target of $18 implies that the stock could see a significant rally of up to 250% from its current levels.
The Future of Data Center Stocks
As demand for AI and cloud services continues to surge, the data center industry is poised for long-term growth. Meta’s significant CapEx increase is just one example of how large tech companies are investing in the infrastructure needed to support next-generation AI. For investors seeking opportunities in this space, Applied Digital (NASDAQ: APLD) represents a promising choice, with its focus on high-performance data centers for AI and cloud services.
With the stock still facing volatility, the potential for substantial growth remains. For those looking to capitalize on the AI boom, Applied Digital could be a standout in the data center sector. As the market continues to shift, companies like Applied Digital are well-positioned to benefit from the surging demand for AI-optimized infrastructure.
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