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Further Reading from MarketBeat Applied Digital's Shorts Got Squeezed—Now What?Written by Thomas Hughes. Published 10/13/2025. 
Key Points - Applied Digital's stock price surge is indicative of its future strength, but short sellers are also driving volatility.
- The company's revenue and earnings outlook are rapidly expanding as AI demand intensifies.
- The stock price is at risk of pulling back sharply in late October and November, closing a gap that formed on the daily charts.
Investors considering Applied Digital's (NASDAQ: APLD) AI exposure should think twice before rushing in. The robustly improving outlook for AI-driven demand, revenue, and earnings helped spark the 30% October gain, but elevated short interest amplified the move. AI breakthroughs. Inflation shocks. Energy rotations. The market is moving fast — and the biggest winners often start small.
At Street Ideas, we focus on small-cap companies showing early momentum — before the crowd piles in. "3 Under-the-Radar Stocks Triggering Early Signals" Short interest was not only high — over 32% in late September, but MarketBeat data shows short sellers had been increasing their bets, pushing short activity and short interest to record levels. The takeaway: short-covering is the primary driver of the surge, which leaves the stock exposed to volatility and the risk of a significant pullback. 
Applied Digital Rockets Higher as AI Demand Surges Applied Digital reported a strong fiscal Q1, with core business growth of 85% — outperforming consensus by more than 4,000 basis points. Yet the market's attention isn't on its cryptocurrency-oriented operations; it's on the company's emerging AI data-center business and the hyperscaler demand it's attracting. (See Q1 results.) The company announced new contracts and plans for a second AI-centric data center that would double capacity. Management said an unnamed client is expected to take 100% of Polaris Forge 2. If that holds, combined with Polaris Forge 1, the planned capacity would be fully leased — pushing the company to develop additional facilities. Management forecasts an annualized net operating income (NOI) run rate of $500 million per facility, implying $1 billion of NOI by 2028 for two facilities. If Applied Digital continues expanding — and it says it's in early talks for more projects — each additional facility could add roughly another $500 million to the NOI projection. Analysts Lift Targets: APLD Stock Price Overextends on Short-Covering Analysts responded positively to the results and guidance update, raising price targets and extending the high end of their ranges. But the 30% surge outpaced the improvement in sentiment, effectively capping fair value around $41. Most new targets land in the high-$30s, where the stock may consolidate. Short sellers could reposition at these levels, reinforcing the cap. Absent a fresh catalyst, APLD could trade sideways until the next earnings report. Institutional ownership — over 65% and net buyers this year — is another risk. The recent rally gives institutions an opportunity to take profits; if they sell more aggressively than they buy, selling pressure could outweigh demand and create a persistent headwind for the stock. The Technical Outlook: APLD Crosses Pivot Point — Wait for Support to Confirm Technically, APLD looks bullish after a 30% surge that produced a large weekly green candle and broke key resistance at the prior all-time high. Using a measured-move approach (the prior trading range), the upside is roughly $30 — which would put APLD near $65 at some point in 2026. However, the rapid advance beyond the broken resistance increases the chance of a sizable pullback to retest prior highs near $30 to close the daily-chart gap before moving higher.
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