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Market participants have quietly been mulling the ways AI and crypto can benefit from each other for years. While the possibilities are still coming into focus, Needham sees at least one near-term opportunity for investors, and a stock to play it. In the near term, the infrastructure level is the place for investors, and Applied Digital offers an interesting opportunity, according to the firm. “We have been excited about Applied Digital, which is a bitcoin mining hosting provider that recently entered into hosting high performance compute (HPC) and AI,” Needham analyst John Todaro told CNBC by email. “Last week the company signed a $180 million agreement for an AI customer, ” he added. “Given the similar power density requirements between bitcoin mining and hosting AI applications, we believe there is an attractive opportunity for Applied Digital and potentially other mining hosting providers to enter this space.” Each of the seven Wall Street analysts covering the stock has a buy rating on it. The average price target on the stock is $10.42, which implies about 25% upside from its current level. Hype around AI exploded earlier this year with the surging popularity around ChatGPT, causing some to draw parallels between it and other technology hype cycles (think blockchain, or the metaverse). It’s still early days for both crypto and AI individually – although the AI hype may have better longevity from having been around for longer. Both are unregulated technologies seen as potentially transformative and trying to prove their usefulness in the “real” world. Down the road, many market participants see the two becoming more intertwined with each other. “Given crypto runs primarily via automated smart contracts on interoperable blockchains, there is almost a perfect marriage between automated activity that can be done via AI models which can then be transacted via these chains and executed by smart contracts. This could lead to broad changes in payments, insurance, medical applications, and others,” Todaro said.
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