Applied Digital Corporation Common Stock
APLD
$28.12
+6.60%
Applied Digital Corporation designs, develops, owns, and operates large-scale, purpose-built data centers engineered for high-performance computing (HPC) workloads, including AI, machine learning, and accelerated-compute applications, which it markets as 'AI factories' and leases to hyperscale and other compute customers under long-term arrangements. The company operates through two segments — a legacy Data Center Hosting business (which still generates the majority of revenue) and a fast-scaling HPC Hosting business — positioning it as a pure-play AI infrastructure developer rather than a diversified technology conglomerate. The current investor narrative is dominated by the company's transformation into a contracted AI data center landlord: headlines through 2026 highlight a $7.5 billion hyperscaler lease signed in April and a cumulative contracted backlog reported at roughly $36 billion, which bulls argue de-risks the story and validates the build-out model. Against that, bears point to a debt-financed construction program, deeply negative free cash flow, customer concentration, and a stock that has round-tripped violently — a debate crystallized by the August 2026 CoreWeave-driven selloff in AI infrastructure names on debt-financing and interest-rate concerns.…
APLD
Applied Digital Corporation Common Stock
$28.12
Related headlines
Investment Opinion: Should I buy APLD Today?
The synthesized recommendation is a Hold with a speculative bias. The core thesis is that Applied Digital's $36 billion contracted backlog and 139% revenue growth provide a powerful long-term opportunity, but the -$1.81 billion free cash flow and 2.86x debt-to-equity create near-term existential risk. The analyst consensus is 'strong_buy' with an average target of $74.23, implying 181% upside, but the market is clearly discounting this due to financing concerns. Supporting evidence includes: revenue growth of 139.29% YoY, gross margin expansion to 42.49%, a current ratio of 4.01, and a PS of 21.58x that, while high, is down from ~60x a year ago. However, the negative net margin of -39.9% and negative EBITDA of -$52.13 million show the company is not yet self-sustaining. The biggest risks are financing conditions, customer concentration, and execution delays. The rating would upgrade to Buy if free cash flow turns positive or if the PS ratio compresses below 15x with sustained revenue growth; it would downgrade to Sell if cash burn accelerates or if a major contract is cancelled. Relative to its own history, the stock is cheaper on PS, but relative to peers, it remains overvalued; thus, it is fairly valued only if the backlog converts as planned.
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APLD 12-Month Price Forecast
Applied Digital presents a high-risk, high-reward opportunity driven by its massive AI data center backlog, but near-term financials are strained by heavy cash burn and leverage. The stock's 21.58x PS ratio is elevated, yet it has compressed from ~60x a year ago, suggesting some value if growth continues. The extreme beta of 5.73 and 53.23% max drawdown make it unsuitable for risk-averse investors. I would upgrade to bullish if free cash flow turns positive or if the company secures additional long-term financing at reasonable rates; I would downgrade to bearish if cash burn accelerates or if a major customer contract is delayed.
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 $72.21 and implied upside of +156.8% versus the current price.
Average Target
$72.21
0 analysts
Implied Upside
+156.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$38 - $109
Analyst target range
Coverage is robust for a company of this size, with 11 analysts covering APLD and a consensus recommendation of 'strong_buy' (recommendation mean of 1.36 on a 1-5 scale where 1 is strong buy). The average target price is $74.23, which implies roughly +181% upside from the current price of $26.42 — an extraordinarily wide gap that reflects either deep undervaluation or a market that has lost faith in the analyst community's assumptions. The consensus clearly leans bullish, with the institutional ratings history showing a steady stream of Buy/Outperform reiterations from Northland Capital Markets, Lake Street, Needham, Craig-Hallum, B. Riley Securities, and Citizens through mid-2026, and no downgrades visible in the data.
The target range is extremely wide — from a low of $37.50 to a high of $109.00 — a spread of 191% between the low and high targets, which signals very high uncertainty and low conviction even within a bullish consensus. The high target of $109.00 implies the market would need to price in successful execution of the entire contracted backlog, multiple expansion back toward peak levels, and a clear path to profitability; the low target of $37.50 still implies +42% upside but prices in significant execution risk, margin compression, and financing headwinds. The fact that even the lowest analyst target is 42% above the current price suggests the selloff has been driven by macro/rate concerns and technical factors rather than fundamental downgrades — but the enormous dispersion means investors should treat the consensus target as a directional signal, not a precise forecast, and recognize that with a beta of 5.73 and a 53.23% max drawdown, this remains a high-risk, high-reward position where the range of outcomes is unusually wide.
Bulls vs Bears: APLD Investment Factors
The bull case rests on a $36 billion contracted backlog, 139% revenue growth, and a strong analyst consensus with 181% upside to the average target. The bear case centers on a -$1.81 billion free cash flow, 2.86x debt-to-equity, and a 21.6x PS ratio that leaves little room for error. Currently, the bear evidence appears stronger because the company's negative cash flow and reliance on external financing create near-term fragility, especially with interest rates pressuring AI infrastructure names. The single most important tension is whether the contracted backlog converts to revenue and cash flow before financing conditions tighten further; if it does, the stock could re-rate dramatically, but if execution slips, the downside is severe.
Bullish
- Massive contracted backlog de-risks growth: Applied Digital has signed a $7.5 billion hyperscaler lease and reports a cumulative contracted backlog of roughly $36 billion, providing multi-year revenue visibility that is rare for a company of its size. This backlog, if executed, would transform the company from a speculative builder into a contracted AI infrastructure landlord.
- Explosive revenue growth: Revenue surged 139.29% year-over-year to $126.64 million in the quarter ending 2026-02-28, following a step-up from $64.22 million in the prior quarter. This demonstrates the initial HPC hosting ramp is materializing and validates the build-out model.
- Gross margin expansion: Gross margin improved to 42.49% in the latest quarter from 20.57% in the prior quarter and 13.41% a year earlier, showing operating leverage as higher-margin HPC hosting revenue scales. This trend, if sustained, could lead to profitability.
- Strong analyst consensus and upside: 11 analysts rate the stock a 'strong_buy' with a mean recommendation of 1.36, and the average target price of $74.23 implies 181% upside from the current $26.42. Even the lowest target of $37.50 suggests 42% upside, indicating the selloff may be overdone.
Bearish
- Severe cash burn and negative FCF: Free cash flow TTM is -$1.81 billion, driven by $775.2 million in quarterly capex and $500.7 million in acquisitions. The company is entirely dependent on external capital, making it vulnerable to credit market conditions.
- Heavy debt burden: Debt-to-equity stands at 2.86x and total debt to capitalization is 64.1%, with interest expense of $2.39 million in the latest quarter. Rising rates could strain finances and dilute equity further.
- Extreme valuation multiples: PS ratio is 21.58x and EV/Sales is 21.34x, far above the 2-5x typical for IT services peers. PEG of 2.44 suggests the premium is not fully justified by growth, leaving room for multiple compression.
- Customer concentration risk: The business relies on a few hyperscale customers, with the $7.5 billion lease representing a significant portion of backlog. Loss or delay of a major contract would severely impact revenue.
APLD Technical Analysis
Applied Digital is in a volatile, range-bound consolidation rather than a clean trend, with the stock up 53.78% over the past year but sitting at $26.42, only about 26.9% of the way up its 52-week range of $17.254 to $50.725. That positioning — closer to the lows than the highs despite a positive 1-year return — tells the story of a stock that spiked to $50.725 and has since given back the majority of those gains, leaving it in a 'show-me' zone where momentum buyers have been shaken out but the long-term uptrend structure has not fully broken. The 52-week low at $17.254 remains roughly 35% below the current price, so the stock is not at capitulation levels, but the failure to hold the upper half of the range signals persistent supply overhead.
Short-term momentum is clearly deteriorating and diverging sharply from the longer-term trend: the stock is down 15.18% over the past month and 38.13% over three months, versus a +53.78% 1-year gain, a classic deceleration pattern where the trailing-year return is being steadily eroded by recent weakness. Relative strength confirms the underperformance — APLD trails SPY by 14.12 percentage points over 1 month and 41.17 points over 3 months, even as it outperformed SPY by 37.56 points over the full year. The 6-month change of -2.33% and YTD change of -6.01% show the stock has essentially gone sideways-to-down for two quarters, and with a short ratio of 3.64 days-to-cover and elevated volume of roughly 10.1 million shares, there is enough two-sided activity for sharp squeezes or further flushes around news events.
Key technical levels are well defined: support sits at the 52-week low of $17.254, with the recent September swing low near $24.29 acting as the first line of defense, while resistance is anchored at the 52-week high of $50.725, with intermediate supply around the $31-$32 area where the stock repeatedly failed in August. A decisive breakout above $32 would suggest the multi-month downtrend is reversing and could open a path back toward the $40s, whereas a breakdown below $24 would put the $17.254 low in play and likely trigger momentum-driven selling. The beta of 5.728 is the critical risk-management fact here — the stock is roughly 5.7 times as volatile as the S&P 500, meaning a 1% market move implies a ~5.7% move in APLD, so position sizing must be dramatically smaller than for a typical large-cap and stop-losses must be wide enough to survive routine 10-15% swings.
Beta
5.73
5.73x market volatility
Max Drawdown
-53.2%
Largest decline past year
52-Week Range
$19-$51
Price range past year
Annual Return
+41.2%
Cumulative gain past year
| Period | APLD Return | S&P 500 |
|---|---|---|
| 1m | -0.4% | -1.0% |
| 3m | -39.6% | +2.0% |
| 6m | +8.4% | +17.4% |
| 1y | +41.2% | +15.0% |
| ytd | +0.0% | +11.7% |
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APLD Fundamental Analysis
Revenue is growing rapidly but unevenly: the most recent quarter (ending 2026-02-28) posted $126.64 million in revenue, up 139.29% year-over-year, following $126.59 million in the prior quarter (2025-11-30) and just $64.22 million in the quarter before that (2025-08-31). The sequential trend shows a massive step-up from the ~$64 million level to ~$127 million and then a plateau at that level, suggesting the initial HPC hosting ramp has landed but the next leg of growth depends on new capacity coming online. The revenue segment data is sparse — only a 'Mining Segment' figure of $2.987 million is disclosed — but the company's own framing and news flow indicate the Data Center Hosting segment still drives the majority of revenue while the HPC/AI hosting business is the growth engine that will dominate future periods as contracted leases convert to revenue.
Profitability remains deeply negative despite improving gross margins: the latest quarter showed a net loss of $99.30 million on $126.64 million of revenue, a net margin of -78.4%, with gross profit of $53.81 million (42.49% gross margin) — a sharp improvement from the 20.57% gross margin in the prior quarter and 13.41% a year earlier. However, operating income was still -$18.99 million (operating margin of -14.99%) and EBITDA was -$52.13 million, dragged down by $82.66 million in SG&A and $20.81 million in depreciation and amortization, plus $51.57 million in net other expenses. The trajectory is mixed: gross margin expansion is real and encouraging, but the bottom line is not converging quickly, and the TTM net margin of -39.9% with a trailing EPS of -$0.0185 shows the company is still burning heavily while it builds.
The balance sheet is the central risk: debt-to-equity stands at 2.86x, total debt to capitalization is 64.1%, and free cash flow TTM is a staggering -$1.81 billion, driven by $775.2 million of capital expenditure in the latest quarter alone and $500.7 million of acquisitions. Liquidity is a relative bright spot — cash at end of period was $1.93 billion with a current ratio of 4.01 and cash per share of $6.37 — but that cash was largely raised externally, with $149.9 million of common stock issued in the latest quarter and $405.8 million in the prior quarter, plus $194.8 million of net financing inflows. ROE is -13.71% and ROA is -1.85%, confirming that the enormous asset base being built is not yet generating returns; the company is entirely dependent on external capital markets to fund its growth, which makes it acutely sensitive to interest rates and credit conditions — exactly the dynamic that pressured the stock in August 2026.
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?
Because Applied Digital reported negative net income (TTM EPS of -$0.0185, net margin of -39.9%) and negative EBITDA (-$52.13 million in the latest quarter), the PE ratio is not meaningful — the trailing PE of -52.68 and forward PE of -105.68 are both negative and therefore useless as valuation anchors. The appropriate primary metric is therefore the price-to-sales ratio: APLD trades at a PS of 21.58x on a trailing basis and an EV/Sales of 21.34x, with a price-to-book of 7.41x and a price-to-cash-flow of 147.10x. The forward PE of -105.68 versus trailing PE of -52.68 implies the market expects losses to widen before they narrow, consistent with a company still in heavy investment mode rather than one approaching profitability.
On a peer-comparison basis, a PS of 21.58x is a substantial premium to the broader Information Technology Services industry, where mature IT services firms typically trade in the 2-5x sales range, and even versus high-growth AI infrastructure peers the multiple is rich — though the company's 139.29% YoY revenue growth and ~$36 billion contracted backlog provide some justification for a growth-premium multiple. The PEG ratio of 2.44 suggests that even after adjusting for growth, the stock is not cheap, and the EV/EBITDA of -197.34 is meaningless given negative EBITDA. The premium is defensible only if the contracted backlog converts to revenue at high margins and the company reaches sustained profitability; if execution slips or financing costs rise, the multiple has enormous room to compress toward peer levels.
Historically, APLD's PS ratio has been extremely volatile: it was 58.50x in the quarter ending 2026-02-28, 59.41x in 2025-11-30, 63.68x in 2025-08-31, and 36.15x in 2025-05-31, versus the current 21.58x — meaning the stock is now trading at roughly one-third of its own recent peak sales multiple. The PB ratio of 7.41x compares to 4.69x in the latest reported quarter and 5.19x the quarter before, so on a book basis the stock is actually more expensive than it was at the last two reporting dates despite the price decline, because book value has been diluted by equity issuance. The compression in PS from ~60x to ~21.6x reflects both the price decline and the rapid revenue growth catching up to the multiple — a classic de-rating that can either signal a value opportunity if growth continues or fundamental deterioration if the backlog fails to convert.
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 and operational risks are acute: free cash flow TTM is -$1.81 billion, with $775.2 million in quarterly capex and $500.7 million in acquisitions, requiring continuous external funding. Debt-to-equity is 2.86x and total debt to capitalization is 64.1%, while interest expense was $2.39 million in the latest quarter. The company's net loss of $99.30 million on $126.64 million revenue (net margin -78.4%) shows that profitability is far off, and with only $1.93 billion in cash, another year of similar burn could exhaust liquidity without new raises. Customer concentration adds operational risk, as a few hyperscaler leases dominate the backlog. Market and competitive risks include extreme valuation compression potential: PS of 21.58x and EV/Sales of 21.34x are far above the 2-5x typical for IT services, and PEG of 2.44 indicates the premium is not fully supported by growth. The beta of 5.73 means a 1% market drop could lead to a ~5.7% decline in APLD, and the August 2026 CoreWeave-driven selloff on debt-financing concerns shows how quickly sentiment can turn. Regulatory and macro headwinds, such as rising interest rates, directly increase the cost of capital for a company that relies on debt and equity issuance. The worst-case scenario involves a financing crunch: if credit markets tighten or a major customer delays, the stock could plummet to its 52-week low of $17.254, representing a 35% loss from the current $26.42. With a max drawdown of 53.23%, a more severe scenario could see the stock fall below $15, especially if analyst targets are revised down from the current low of $37.50. Investors could lose 35-45% in such an adverse scenario, underscoring the need for strict position sizing.
FAQ
The most severe risk is financial: free cash flow TTM is -$1.81 billion, and debt-to-equity is 2.86x, meaning the company relies on external capital and could face a liquidity crisis if markets tighten. Second, customer concentration: a few hyperscaler leases dominate the $36 billion backlog, so losing a major customer would be devastating. Third, valuation compression: the PS of 21.58x leaves little room for error, and any slowdown could trigger a sharp de-rating. Fourth, macro sensitivity: with a beta of 5.73, APLD is highly vulnerable to interest rate hikes and market volatility, as seen in the August 2026 selloff.
The 12-month forecast is highly uncertain, with three scenarios: bull (30% probability) targeting $74-$109, base (50%) targeting $37.50-$50, and bear (20%) targeting $17.25-$24. The base case assumes steady execution and no major financing disruptions, with the stock trading between the low analyst target and the 52-week high. The bull case requires successful backlog conversion and favorable financing, while the bear case involves a cash crunch or customer loss. The most likely scenario is the base case, but given the wide dispersion, investors should be prepared for volatility.
APLD appears overvalued on traditional metrics: its PS ratio of 21.58x is far above the 2-5x typical for IT services peers, and its PEG of 2.44 suggests the premium is not fully justified by growth. However, the PS has compressed from ~60x a year ago, and the EV/Sales of 21.34x is still high but reflects the company's massive backlog. The market is pricing in flawless execution of the $36 billion backlog and a path to profitability; if that falters, the multiple could contract sharply. Thus, it is overvalued relative to current financials but may be undervalued if the backlog converts as planned.
APLD is a high-risk, high-reward stock that may be suitable for speculative investors with a high tolerance for volatility. The analyst consensus is 'strong_buy' with an average target of $74.23, implying 181% upside, but the stock trades at a PS of 21.58x and has a beta of 5.73, meaning it can swing wildly. The biggest downside risk is its -$1.81 billion free cash flow and 2.86x debt-to-equity, which could lead to dilution or financial distress if financing conditions tighten. For those who believe in the AI infrastructure theme and can stomach a 50% drawdown, it could be a buy on dips; for others, it is best avoided.
APLD is more suitable for long-term, risk-tolerant investors who can hold through extreme volatility, as the AI infrastructure build-out is a multi-year theme. Short-term trading is extremely risky due to the beta of 5.73 and frequent 10-15% swings; the stock is down 38% over three months despite a 53% one-year gain. There is no meaningful dividend (yield 0.05%), so returns depend entirely on capital appreciation. A minimum holding period of 3-5 years is advisable to allow the contracted backlog to convert to revenue and for the company to potentially reach profitability. However, position sizing should be small due to the high risk of permanent capital loss.