Applied Digital and Lemonade: Two AI Stocks Ready for Bull Runs in the Expanding AI Market

Artificial intelligence (AI) has rapidly become a transformative force in the stock market, with many AI companies experiencing skyrocketing valuations. According to a recent UN Trade and Development (UNCTAD) report, the global AI market is projected to grow from $189 billion in 2023 to $4.8 trillion by 2033. This growth presents a strong opportunity for quality AI stocks to outperform the market over the next five to ten years. Here are two AI stocks that could be poised for explosive growth.

Applied Digital (NASDAQ: APLD)

Applied Digital builds and buys data centers where companies can rent space and install their own servers. Initially focused on blockchain companies, Applied Digital later shifted its focus to the high-performance computing (HPC) and AI industries. Its data center hosting business is now profitable, with a profit of $8.8 million in its fiscal 2025 third quarter. The company has also announced two lease agreements with AI hyperscaler Coreweave, which are expected to generate about $7 billion in revenue over the next 15 years.

The top tech companies are spending heavily on data centers and AI infrastructure, and Applied Digital is well-positioned to capitalize on this spending. As it transitions to a real estate investment trust (REIT) model and focuses on its data center business, Applied Digital could see significant growth in the coming years.

Lemonade (NYSE: LMND)

Lemonade is an insurance company offering renters, homeowners, car, pet, and term life policies. But it has made AI a key part of its business since its launch in 2015. Lemonade uses AI at every stage of its processes, from new customer quotes through underwriting and claims processing. The company's AI chatbot, Maya, allows new customers to quickly get quotes, and the underwriting process uses AI to calculate premiums and assign a lifetime value (LTV) to each customer.

Lemonade has also fully automated about 55% of its claims process and handles over 40% of customer service tickets with AI. While the company is not yet profitable, it has seen revenue grow by 27% year over year to $151.2 million in the first quarter of 2025. Its in-force premium (IFP) has also increased by 27% to $1.0 billion, marking the sixth consecutive quarter of growth.

Investing in young businesses that are losing money can be risky, but it also presents an opportunity to get in on the ground floor. Lemonade's high-tech business model has been successful in attracting customers, particularly younger customers - 70% of its customer base is under 35. Based on Lemonade's financial growth and embrace of AI technology, it could be poised for significant growth in the coming years.

In conclusion, both Applied Digital and Lemonade are well-positioned for growth in the rapidly expanding AI market. While investing in these stocks carries risk, they also offer the potential for significant returns over the long term. As the AI market continues to grow, these two companies could be at the forefront of the next wave of technological innovation and stock market success.