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Both companies are seeing spectacular sales growth due to AI-driven demand for computing capacity.
Applied Digital experienced a dramatic surge in its stock value, climbing nearly 500% over the last 12 months, peaking at $42.27 by January 28. This impressive performance is directly attributed to the escalating demand for computing power driven by the artificial intelligence sector. In its fiscal second quarter of 2026, which concluded on November 30, the company's revenue soared by an astounding 250% year-over-year, reaching $126.6 million. This robust top-line growth is expected to persist, as evidenced by new data center leases worth a significant $16 billion signed during the quarter. However, Applied Digital's business model is not without its challenges. The continuous expansion required to meet the surging demand for data center capacity necessitates substantial capital investment in construction. Consequently, the company has accumulated a considerable debt load, exceeding $2.6 billion by the end of its fiscal Q2. While its cash and equivalents stood at a healthy $1.9 billion, the company is not yet profitable. Its operating expenses in fiscal Q2 amounted to $157.5 million, a threefold increase from $49 million in the previous year, resulting in an operating loss of $31 million. This highlights the high cost associated with its rapid expansion and operations in the competitive AI infrastructure market.
CoreWeave, a prominent "neocloud" provider and one of Applied Digital's largest clients, is also witnessing extraordinary sales growth, mirroring the industry's booming demand for AI cloud computing services. The company reported a record revenue of $1.4 billion in Q3, a substantial increase from $583.9 million in the corresponding period of the prior year. A significant advantage for CoreWeave is the strategic backing it receives from Nvidia, the leading AI chip manufacturer. The two companies forged a partnership last year valued at $6.3 billion. This collaboration includes a crucial provision: Nvidia is contractually obligated to purchase any residual unsold data center capacity from CoreWeave through April 13, 2032, providing a critical buffer against potential declines in demand. Furthermore, Nvidia demonstrated its strong confidence in CoreWeave's future by investing $2 billion in the company, acquiring its stock at $87.20 per share. This endorsement from a key industry player underscores the promising outlook for CoreWeave's business within the rapidly expanding AI infrastructure sector. Nonetheless, similar to Applied Digital, CoreWeave's aggressive buildout of expensive computing hardware and advanced cooling systems for AI operations has led to a high level of debt, exceeding $14 billion by the end of Q3.
Both Applied Digital and CoreWeave have successfully capitalized on the burgeoning AI infrastructure market, demonstrated by their impressive sales growth. However, a closer examination of their financial performance reveals key differences that favor CoreWeave as a more attractive investment. CoreWeave recorded significantly higher gross profits in its recent quarter, nearly $1 billion, compared to Applied Digital's $26 million, highlighting CoreWeave's more efficient cost structure relative to its revenue. The strategic support from Nvidia, including a substantial partnership agreement and a $2 billion equity investment, further enhances CoreWeave's investment appeal by mitigating demand risk and signaling strong industry confidence. When evaluating their stock valuations, particularly using the forward price-to-sales (P/S) ratio, CoreWeave presents a better value proposition. Its P/S ratio is currently trading near its 52-week low, indicating a potentially undervalued stock, while Applied Digital's P/S ratio is at the higher end of its 52-week range. Based on its superior sales efficiency (higher gross profits), strong strategic partnerships, and more favorable valuation metrics, CoreWeave emerges as the better investment choice between these two competing AI infrastructure companies.