Applied Digital (NASDAQ: APLD) has been one of the best-performing stocks of 2025. The company has transitioned from a cloud computing and bitcoin mining company into a compute-as-a-service company that has secured $11 billion in contracted revenue from CoreWeave Inc. (NASDAQ: CRWV) over the next 15 years.
That means that the headline numbers in the company’s first-quarter earnings report for fiscal year 2026 were irrelevant. APLD stock is now about the future, and that future looks bright.
One of the key confirmations that investors received in the company’s earnings report is that the company is still on track to complete construction of its 100 MW building, Polaris Forge 1. This will ensure that the company can begin realizing some of that revenue from CoreWeave either in late 2025 or early 2026.
APLD Stock Has Soared Well Above Analysts’ Estimates
At this point, CoreWeave is the company’s only announced customer for its compute-as-a-service business. But investors still have $15 billion reasons to be excited about that. That doesn’t change the fact that the stock is now trading nearly 50% higher than the consensus estimate of analysts.
Analysts typically use an earnings report as an opportunity to update their ratings and/or price target for a stock. That may be the case with APLD stock. That will play out in the upcoming days. In the meantime, it’s time to decide what to do with the stock.
APLD Stock: Buy, Sell, or Hold
To wrap up this discussion, Applied Digital stock has a long-term bull case that is in the early stages. With $11 billion of contracted revenue over the next 15 years, it’s easy to see why APLD stock is up 207% in the last three months.
If you’re a long-term investor who currently owns the stock, congratulations. The choice of whether to take some profits is one only you can make. But you’ll want to leave plenty of meat on the bone due to this stock’s long-term growth potential.
But what if you don’t currently own APLD stock? You have three options.
Option 1: Buy into Strength
First, you can buy into the momentum. There are many investors who believe that you buy into rallies like these, because they can frequently move much higher. But there’s a specific risk to that with Applied Digital that you need to consider.
About 30% of the stock’s float is held by short sellers. That’s undoubtedly part of what’s driving the stock price higher. Many of these investors are trying to cover their short positions as APLD stock is moving higher. That creates a short squeeze, which is one reason a stock can make a parabolic move.
The problem is you don’t know when this short squeeze may end and when it does, the reversal can be just as strong and just as swift. If you buy “at the top” you could be left underwater on the stock.
If you plan to hold APLD stock for several years, that may not matter. After all, you don’t have to justify your results every quarter like a major institution. However, it can still be uncomfortable to sit on a loss like that.
Option 2: Buy the Dip with a Limit Order
That leads to your second option, you could wait for a pullback. The post-earnings move has pushed the stock’s relative strength indicator (RSI) into overbought territory. That’s a technical signal that the stock could be ready to come down.
The concern is that about 65% of the stock is held by institutional investors. If a dip comes, it may be short-lived. A strategy you can use is to place a limit order at a specific price. For example, you could set the order to buy X number of shares at $25 a share. The order will only execute if the stock price hits $25 or lower.
Option 3: Trade the Stock Using Options
This last option is only for those comfortable with options trading. But here are two strategies that you can use. I based these off of December 19, 2025 options chain.
Sell an out-of-the-money call spread (for example, sell the $30 call and buy the $35 call expiring on December 19, 2025). This captures premium from current overbought conditions and limits upside risk. The $30 call trades around $5.25 and the $35 call around $3.95, offering a credit of roughly $1.30 per spread (maximum risk $3.70 per contract). This position profits if the stock stalls, pulls back, or rises modestly but stays below $30–$35 by mid-December.
Selling an out-of-the-money cash-secured put (such as the $25 strike, which offers $7.13 in premium) could be suitable for those willing to buy on a pullback, with a net entry below $18 if assigned.
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