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As artificial intelligence and blockchain technologies continue to reshape the digital economy, investors are eyeing the infrastructure behind these trends. Applied Digital APLD and Core Scientific CORZ are two emerging players straddling both worlds — offering data center solutions that power AI workloads while maintaining strong ties to crypto mining, particularly Bitcoin.

With demand surging for high-performance computing and decentralized infrastructure, both companies are angling for growth in a fast-evolving market. But which stock offers a stronger upside today? In this faceoff, we’ll compare APLD and CORZ across fundamentals, scalability, and exposure to next-gen tech trends to help investors decide which is the better buy now.

Applied Digital: Betting on a High-Risk, High-Reward Transition

Applied Digital is amid a strategic pivot from traditional crypto mining to AI cloud services and high-performance computing (HPC) hosting. The company is aggressively expanding its data center capacity, with its first 100MW HPC facility breaking ground in Ellendale, ND, and its plans to bring an additional 300MW online. Despite the theoretical revenue potential — where 400MW of AI infrastructure could generate more than $2 billion annually — the firm is treading a risky path.

APLD’s financials reveal a challenging landscape. Steep cash burn, negative free cash flow margins, and heavy reliance on debt and preferred equity financing have raised concerns among analysts. The company’s current trajectory positions it as a speculative “lottery ticket” investment. While lower local electricity costs in North Dakota can offer some competitive advantage, APLD still needs to secure key lease agreements and win over major hyperscaler clients. For investors with a high tolerance for risk, Applied Digital’s early-stage growth and potential for massive scaling in HPC hosting could translate into significant rewards if it can overcome execution hurdles and carve out a niche in an increasingly crowded market.

In the second quarter of fiscal 2025, APLD reported $63.9 million in revenues (a 51% year-over-year increase) driven by hosting and cloud performance. Higher costs raised SG&A to $29.8 million and D&A to $26.4 million, though renegotiated GPU leases eased expenses. Net loss reached $138.7 million, while adjusted net loss was $12.6 million. EBITDA climbed 93% to $21.4 million.

APLD has been actively engaged in multiple financing initiatives, including a recent $450 million convertible senior note offering and a $150 million senior secured debt facility. It has also established a strategic partnership with Macquarie Asset Management for a $5 billion perpetual preferred equity financing facility.

Core Scientific: Securing Long-Term AI Infrastructure Deals

Core Scientific has made a remarkable turnaround by diversifying from its legacy bitcoin mining and focusing on AI infrastructure. The company’s pivot is underpinned by landmark long-term contracts with CoreWeave CRWV, exceeding $10 billion in revenues over a 12-year period. This deal with CoreWeave delivers strong revenue visibility while boosting operational capabilities.

Additional commitments from its partner, CoreWeave, are anticipated to drive growth, that may position Core Scientific as a leader in this space. With a capacity of 1,300 MW and a strategic allocation of 900 MW toward HPC hosting, CORZ is positioning itself with a diversified revenue model that leans on stable, contracted deals.

This strategic repositioning minimizes execution risks compared to traditional mining — bolstered by high EBITDA margins and a predictable revenue stream inherent to its long-term contracts. Core Scientific’s growing roster of HPC deals, in tandem with industry endorsements, such as CoreWeave’s $12 billion deal with OpenAI, underscores the robust demand for AI-driven computing power.

Additionally, insider purchases enhance market confidence in CORZ’s operational strategy. While the recent stock price volatility has sparked some short-term concerns, the company’s deep-rooted transformation into a reliable AI infrastructure provider offers compelling prospects for long-term growth and profitability.

In the fourth quarter 2024, Core Scientific reported revenues of $94.9 million (down 33% year over year) and a loss per share of 60 cents. Adjusted EBITDA reached $13.3 million. Digital self-mining revenues fell to $79.9 million and hosted mining dropped to $6.5 million. HPC hosting generated $8.5 million. Debt restructuring reduced total debt by $270 million. Convertible note offerings lowered rates, leaving more than $830 million in cash as the company strengthens its balance sheet heading into 2025.

How Do Estimates Compare for APLD & CORZ?

The Zacks Consensus Estimate for APLD’s fiscal 2025 sales and EPS implies a year-over-year improvement of 52.8% and 26.7%, respectively. EPS estimates for 2025 and 2026 have remained stable over the past 60 days.

APLD Estimate Movement

The Zacks Consensus Estimate for Core Scientific’s 2025 sales and EPS implies a year-over-year decline of 3% and an improvement of 98.4%, respectively. EPS estimates for 2025 and 2026 have been trending southward over the past 60 days.

CORZ Estimate Movement

APLD & CORZ: Price Performance & Valuation

The year-to-date price performances of both Applied Digital and Core Scientific have not been impressive, likely due to tariff concerns and rising Chinese models with lower infrastructure requirements. Shares of APLD and CORZ have lost 27.8% and 46.6%, respectively.

APLD or CORZ: Which is a Better Pick?

Both Applied Digital and Core Scientific have a Zacks Rank #3 (Hold) at present, which makes it difficult to choose one of them. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Style Score can help investors choose between these companies, although they have the same Zacks Rank. APLD's style score of ‘F’ reflects its expensive valuation and low growth potential going forward. However, CORZ's style score of ‘D’ indicates a strong growth prospect, although it has an expensive valuation.

As discussed above, CORZ has a strong revenue stream prospect through its deals with CoreWeave, while APLS is scouting for a deal. Moreover, CORZ is way ahead in building AI infrastructure, with 900 MW allocated toward HPC hosting compared to APLS's 100 MW capacity. Although APLD is building capacity and has plans to expand it to 400 MW, it will still lag CORZ.

Moreover, capacity building will require significant investments that may keep APLD’s margins under pressure over the short term. Meanwhile, CORZ is improving its gross margins, which is reflected in its estimates. Earnings are expected to double, while sales are likely to decline.

Both companies hold strong growth potential over the long term as demand for AI services increases adoption of high-performance computing, a market that is likely to witness a CAGR of 6.3% over the next seven years and reach nearly $83 billion. However, with current fundamentals, Core Scientific has better odds of generating wealth for investors compared to Applied Digital.

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This article originally published on Zacks Investment Research (zacks.com).

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