Applied Digital Corporation Common Stock
APLD
$27.21
-5.03%
Applied Digital Corporation is a U.S.-based designer, developer, owner, and operator of large-scale, purpose-built data centers engineered for high-performance computing (HPC) workloads, including artificial intelligence (AI) and machine learning applications. The company operates two segments: Data Center Hosting and HPC Hosting, positioning itself as a niche player in the AI infrastructure build-out by providing 'AI factories' to investment-grade hyperscalers under long-term leases. The current investor narrative centers on explosive revenue growth driven by massive contracted deals—such as the $7.5 billion hyperscaler lease announced in April 2026 and a $36 billion contracted pipeline—while concerns persist over high leverage, negative margins, and execution risks in a capital-intensive expansion phase. The stock has been a high-beta, high-volatility play on the AI infrastructure boom, with recent news highlighting both its revenue surge (up 400% YoY) and the substantial debt and customer concentration risks that accompany its growth strategy.…
APLD
Applied Digital Corporation Common Stock
$27.21
Related headlines
Investment Opinion: Should I buy APLD Today?
Rating: Buy (High Risk). The thesis is that APLD's explosive revenue growth and massive contracted pipeline ($36B) will eventually translate into profitability, justifying the premium valuation. The analyst consensus is Strong Buy with an average target of $74.23, implying 137.9% upside. However, this is a high-risk, high-reward opportunity suited for aggressive growth investors.
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APLD 12-Month Price Forecast
The AI infrastructure build-out is a powerful secular trend, and APLD is well-positioned with its purpose-built data centers and long-term leases. The company's revenue growth is exceptional, and the contracted pipeline reduces uncertainty. However, the high leverage and negative margins are significant risks. I would upgrade my stance if the company achieves positive operating cash flow or secures additional contracts; I would downgrade if revenue growth decelerates below 50% or if financing becomes constrained.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Applied Digital Corporation Common Stock's 12-month outlook, with a consensus price target around $74.23 and implied upside of +172.8% versus the current price.
Average Target
$74.23
0 analysts
Implied Upside
+172.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$38 - $109
Analyst target range
Applied Digital has coverage from 11 analysts, with a consensus recommendation of 'Strong Buy' (mean rating of 1.36 on a 1-5 scale). The average target price is $74.23, implying a substantial upside of +137.9% from the current price of $31.20, with a low target of $37.50 and a high target of $109.00. The wide range between low and high targets (from $37.50 to $109.00) indicates significant uncertainty about the company's execution and financing, but the overwhelmingly bullish consensus (with recent upgrades from firms like Northland, Lake Street, and Needham) suggests analysts are confident in the long-term AI infrastructure demand and the company's contracted revenue visibility.
Bulls vs Bears: APLD Investment Factors
APLD presents a classic high-risk, high-reward scenario. The bull case is anchored by explosive revenue growth (139% YoY), a $36B contracted pipeline, and improving gross margins, which have driven a Strong Buy consensus and a 138% upside to the average target. However, the bear case is equally compelling: persistent losses, negative operating margins, high leverage (D/E 2.86), and a premium valuation (PS 21.6x) leave little margin for error. The single most important tension is whether the company can execute on its massive contracted backlog and achieve profitability before its debt burden and dilution become unsustainable. If execution succeeds, the stock could re-rate significantly; if not, the downside to the 52-week low of $13.16 is substantial. Currently, the evidence slightly favors the bulls given the contracted revenue visibility and analyst conviction, but the risk is elevated.
Bullish
- Explosive Revenue Growth: Q3 FY2026 revenue surged 139.29% YoY to $126.6M, with sequential growth from $64.2M in Q1. This rapid scaling validates strong demand for AI data center capacity.
- Massive Contracted Pipeline: The company has $36B in contracted revenue, including a $7.5B hyperscaler lease announced in April 2026. This provides multi-year revenue visibility and underpins the growth trajectory.
- Improving Gross Margins: Gross margin expanded from 13.4% in Q1 FY2026 to 42.5% in Q3, indicating better cost absorption and operating leverage as revenue scales.
- Strong Analyst Conviction: 11 analysts rate APLD a Strong Buy (mean 1.36), with an average target of $74.23, implying 137.9% upside. Recent upgrades from Northland, Lake Street, and Needham reinforce positive sentiment.
Bearish
- Persistent Losses and Negative Margins: Net loss of -$99.3M in Q3 FY2026 (net margin -78.4%) and operating margin of -38.7% highlight heavy investment costs. The company is far from profitability, with negative EPS of -$0.37.
- High Leverage and Debt Burden: Debt-to-equity ratio of 2.86 and negative free cash flow of -$1.81B TTM indicate significant financial risk. The company relies heavily on debt financing to fund its capital-intensive expansion.
- Premium Valuation with No Earnings: PS ratio of 21.58x is over 4x the sector average of ~5x, and EV/Sales of 23.65x is even higher. This leaves no room for error; any growth disappointment could trigger a sharp de-rating.
- Customer Concentration Risk: Revenue is heavily dependent on a few hyperscaler customers. The $7.5B lease is with a single customer, and any contract cancellation or renegotiation would severely impact revenue.
APLD Technical Analysis
Applied Digital's stock has exhibited a dramatic uptrend over the past year, with a 1-year price change of +114.43%, significantly outperforming the S&P 500's +20.37% over the same period. The current price of $31.20 sits at approximately 45% of its 52-week range (between $13.16 low and $50.725 high), indicating a substantial pullback from its peak. This positioning suggests the stock is in a corrective phase after a strong rally, trading well below its highs but still well above its lows, which could represent either a value opportunity or a sign of waning momentum depending on broader market sentiment.
Beta
5.77
5.77x market volatility
Max Drawdown
-53.2%
Largest decline past year
52-Week Range
$13-$51
Price range past year
Annual Return
+72.5%
Cumulative gain past year
| Period | APLD Return | S&P 500 |
|---|---|---|
| 1m | -9.5% | +2.5% |
| 3m | -40.7% | +2.7% |
| 6m | -6.3% | +11.1% |
| 1y | +72.5% | +20.5% |
| ytd | -3.2% | +12.3% |
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APLD Fundamental Analysis
Applied Digital's revenue trajectory has been explosive, with the most recent quarter (Q3 FY2026, ending February 28, 2026) reporting revenue of $126.6 million, a 139.29% YoY growth rate, and a sequential increase from $64.2 million in Q1 FY2026. This growth is driven by the Data Center Hosting segment, which has benefited from hyperscaler lease deals, but the company remains unprofitable with a net loss of -$99.3 million in the latest quarter, reflecting a net margin of -78.4%. Gross margin improved to 42.5% in Q3 from 13.4% in Q1, indicating better cost absorption, but operating margin remains deeply negative at -38.7%, highlighting the heavy investment phase.
Quarterly Revenue
$126637000.0B
2026-02
Revenue YoY Growth
+139.3%
YoY Comparison
Gross Margin
42.5%
Latest Quarter
Free Cash Flow
$-1.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is APLD Overvalued?
Given that Applied Digital has negative net income (EPS of -$0.37 in the latest quarter), the price-to-sales (PS) ratio is the most appropriate valuation metric, and it currently stands at 21.58x trailing sales, which is a premium to the sector average of approximately 5x for IT services companies. The forward PE is also negative (-124.8x), confirming that profitability is not expected in the near term. The EV/Sales ratio of 23.65x further underscores the premium, reflecting the market's high expectations for future growth, but this is justified by the company's 139% revenue growth rate and its contracted backlog of $36 billion.
PE
-52.7x
Latest Quarter
vs. Historical
N/A
5-Year PE Range 17x~59x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-197.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are substantial. APLD reported a net loss of -$99.3M in Q3 FY2026, with a net margin of -78.4% and operating margin of -38.7%. The company's debt-to-equity ratio stands at 2.86, and free cash flow is deeply negative at -$1.81B TTM, indicating heavy reliance on external financing. Interest expenses are rising, and the company's negative EPS of -$0.37 underscores the lack of profitability. The current ratio of 4.01 provides some liquidity cushion, but the scale of capital expenditures required to build out data centers could strain cash reserves if financing markets tighten.