Applied Digital Faces Challenges Despite Strong Sales Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 05 2024
0mins
Should l Buy APLD?
Source: SeekingAlpha
Applied Digital Corp's stock has dropped 7.32% and hit a 20-day low, reflecting investor concerns amid a broader market decline, with the Nasdaq-100 down 1.57% and the S&P 500 down 1.45%.
Despite reporting a remarkable 250% surge in sales to nearly $127 million in fiscal Q2 2026, Applied Digital is grappling with high expenditure pressures, resulting in a non-GAAP diluted loss of $0.07 per share. The company has also signed multi-year leasing agreements with CoreWeave, projected to generate up to $16 billion in revenue over 15 years, but this hinges on the continued growth of the AI market.
The significant sales growth has not translated into profitability, raising concerns about the company's valuation and future performance. Investors are cautious as Applied Digital's expenses rose by 230%, leading to a substantial operating loss, which may impact its stock price moving forward.
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Analyst Views on APLD
Wall Street analysts forecast APLD stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for APLD is 49.18 USD with a low forecast of 36.00 USD and a high forecast of 99.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
11 Buy
0 Hold
0 Sell
Strong Buy
Current: 27.845
Low
36.00
Averages
49.18
High
99.00
Current: 27.845
Low
36.00
Averages
49.18
High
99.00
About APLD
Applied Digital Corporation is a designer, builder, and operator of sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads. The Company’s segments include data center hosting (Data Center Hosting Business) and high-performance compute hosting (HPC Hosting Business). The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. Customer-owned hardware is installed in its facilities, and the Company provides operational and maintenance services for a fixed fee. Its facilities include a 106 megawatt (MW) facility in Jamestown and a 180 MW facility in Ellendale, North Dakota. The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and infrastructures to provide services to customers. Its HPC data center is located at its Polaris Forge 1 campus with 100 MW capacity.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Applied Digital Stock Soars 221% in 2025, Continues to Surge in 2026
- Significant Performance Growth: Applied Digital's stock surged 221% in 2025, with a further 41% increase in January 2026, highlighting its strong position in the AI data center sector and likely attracting more investor interest.
- Substantial Revenue Increase: The company reported a 250% year-over-year revenue growth to $127 million in Q2, while narrowing its net loss to $37 million, indicating an improving business model and potential for future profitability.
- Strategic Partnership Agreements: The $11 billion, 15-year contract with CoreWeave and a 15-year lease for 200 megawatts with another hyperscaler will generate an additional $5 billion in revenue, further solidifying its market position.
- Future Growth Potential: Applied Digital aims for $1 billion in net operating income over the next five years; while it may not be profitable in the short term, its first-mover advantage in hyperscale data center construction will lay the groundwork for long-term growth.
See More
AI Data Centers Could See $7 Trillion Investment by 2030
- Debt Surge Risk: Applied Digital's debt skyrocketed from $44 million in Q1 2024 to $2.6 billion today, with a debt-to-equity ratio exceeding 125%, indicating significant financial risk as the company pursues growth.
- High Customer Dependency: Of the projected $16 billion in future lease revenue, $11 billion comes from CoreWeave, meaning that any failure by CoreWeave to meet obligations could have catastrophic consequences for Applied Digital, amplifying investment risks.
- Construction Delay Concerns: The company's construction timeline is under pressure, and if it fails to meet deadlines, CoreWeave can walk away from leases penalty-free, creating uncertainty that undermines investor confidence.
- Market Outlook and Risks: While McKinsey forecasts $7 trillion in data center investments by 2030, Applied Digital's high debt levels and reliance on a single customer create significant uncertainties regarding its future in this burgeoning market.
See More
AI Infrastructure Investment Boom: Risks for Applied Digital
- Debt Surge Risk: Applied Digital's debt skyrocketed from $44 million in Q1 2024 to $2.6 billion today, with a debt-to-equity ratio exceeding 125%, indicating that while the company is leveraging debt for growth, it faces significant financial risks, especially as future revenue heavily relies on a single client.
- Customer Concentration Risk: The company is banking on $16 billion in future lease revenue primarily from two companies, with $11 billion from CoreWeave, another high-growth firm taking on substantial debt; if CoreWeave fails to meet its obligations, it could lead to catastrophic consequences for Applied Digital.
- Construction Timeline Pressure: Applied Digital must meet its construction deadlines or risk losing its leases, as CoreWeave can walk away penalty-free if Applied Digital falls behind schedule, adding extra pressure in the complex data center construction process and increasing investment uncertainty.
- Investment Risk Assessment: While there is significant upside potential if everything goes perfectly, the high levels of debt accrued by Applied Digital to compete raise the risk profile for investors, particularly in the current economic climate, leading to a cautious outlook on its future growth.
See More
Applied Digital's AI Data Center Expansion Analysis
- Rapid Expansion: Applied Digital is scaling its AI data centers at an industry-leading pace, yet the path to a $100 stock price hinges on its ability to manage margins, cash flow, and execution challenges.
- Market Price Fluctuations: As of January 30, 2026, Applied Digital's stock price reflects market expectations regarding its future growth potential, necessitating investor attention to the relationship between financial performance and market reactions.
- Investor Considerations: Ahead of the next significant market move, investors must grasp the catalysts and risks influencing Applied Digital's stock price, including shifts in technology execution and market demand.
- Uncertain Future Outlook: While the company's expansion potential in the AI data center sector is substantial, its ability to achieve sustainable cash flow and margin improvements will directly impact the long-term trajectory of its stock price.
See More
Applied Digital: Leading the AI Data Center Boom
- Significant Revenue Growth: Applied Digital reported a 250% year-over-year revenue increase in Q2 2023, reaching $127 million, while narrowing its net loss to $37 million, indicating strong financial improvement and robust demand in the AI data center sector.
- Long-Term Contracts Secured: The company has signed an $11 billion, 15-year contract with CoreWeave for the operation of the Polaris Forge 1 facility, alongside a 15-year lease for 200 megawatts with a U.S. hyperscaler, expected to generate an additional $5 billion in revenue.
- Clear Expansion Plans: Polaris Forge 2 is set to open in 2026, with a third facility planned for 2027, and as these facilities come online, Applied Digital anticipates achieving $1 billion in net operating income within five years, showcasing its strong market potential.
- Analyst Ratings Optimistic: Wall Street analysts are bullish on Applied Digital, with 100% of 14 analysts rating it a buy, and a median price target of $43.50 indicating a potential 22% return, despite profitability being constrained by high capital investments in the short term.
See More
Applied Digital Sees Significant Growth in AI Data Centers
- Significant Revenue Growth: Applied Digital reported a 250% year-over-year revenue increase in Q2 2023, reaching $127 million, while narrowing its net loss to $37 million, significantly improving from a $0.63 loss per share in the same quarter last year, indicating strong growth potential in the AI data center sector.
- Long-Term Contracts Signed: The company secured an $11 billion, 15-year contract with CoreWeave for the construction of the Polaris Forge 1 facility in North Dakota, providing a stable revenue stream and enhancing its market position.
- Expansion Plans: The Polaris Forge 2 facility is expected to open in 2026, with a 15-year lease signed for 200 megawatts of capacity with a U.S. hyperscaler, projected to generate an additional $5 billion in revenue, further solidifying its leadership in the high-performance computing market.
- Analyst Ratings Optimistic: Currently, 100% of the 14 analysts covering Applied Digital rate it as a buy, with a target price of $43.50, indicating a potential 22% return, reflecting market confidence in the company's future growth prospects.
See More
Applied Digital Stock Soars 221% in 2025, Continues to Surge in 2026
- Significant Performance Growth: Applied Digital's stock surged 221% in 2025, with a further 41% increase in January 2026, highlighting its strong position in the AI data center sector and likely attracting more investor interest.
- Substantial Revenue Increase: The company reported a 250% year-over-year revenue growth to $127 million in Q2, while narrowing its net loss to $37 million, indicating an improving business model and potential for future profitability.
- Strategic Partnership Agreements: The $11 billion, 15-year contract with CoreWeave and a 15-year lease for 200 megawatts with another hyperscaler will generate an additional $5 billion in revenue, further solidifying its market position.
- Future Growth Potential: Applied Digital aims for $1 billion in net operating income over the next five years; while it may not be profitable in the short term, its first-mover advantage in hyperscale data center construction will lay the groundwork for long-term growth.
See More
AI Data Centers Could See $7 Trillion Investment by 2030
- Debt Surge Risk: Applied Digital's debt skyrocketed from $44 million in Q1 2024 to $2.6 billion today, with a debt-to-equity ratio exceeding 125%, indicating significant financial risk as the company pursues growth.
- High Customer Dependency: Of the projected $16 billion in future lease revenue, $11 billion comes from CoreWeave, meaning that any failure by CoreWeave to meet obligations could have catastrophic consequences for Applied Digital, amplifying investment risks.
- Construction Delay Concerns: The company's construction timeline is under pressure, and if it fails to meet deadlines, CoreWeave can walk away from leases penalty-free, creating uncertainty that undermines investor confidence.
- Market Outlook and Risks: While McKinsey forecasts $7 trillion in data center investments by 2030, Applied Digital's high debt levels and reliance on a single customer create significant uncertainties regarding its future in this burgeoning market.
See More
AI Infrastructure Investment Boom: Risks for Applied Digital
- Debt Surge Risk: Applied Digital's debt skyrocketed from $44 million in Q1 2024 to $2.6 billion today, with a debt-to-equity ratio exceeding 125%, indicating that while the company is leveraging debt for growth, it faces significant financial risks, especially as future revenue heavily relies on a single client.
- Customer Concentration Risk: The company is banking on $16 billion in future lease revenue primarily from two companies, with $11 billion from CoreWeave, another high-growth firm taking on substantial debt; if CoreWeave fails to meet its obligations, it could lead to catastrophic consequences for Applied Digital.
- Construction Timeline Pressure: Applied Digital must meet its construction deadlines or risk losing its leases, as CoreWeave can walk away penalty-free if Applied Digital falls behind schedule, adding extra pressure in the complex data center construction process and increasing investment uncertainty.
- Investment Risk Assessment: While there is significant upside potential if everything goes perfectly, the high levels of debt accrued by Applied Digital to compete raise the risk profile for investors, particularly in the current economic climate, leading to a cautious outlook on its future growth.
See More
Applied Digital's AI Data Center Expansion Analysis
- Rapid Expansion: Applied Digital is scaling its AI data centers at an industry-leading pace, yet the path to a $100 stock price hinges on its ability to manage margins, cash flow, and execution challenges.
- Market Price Fluctuations: As of January 30, 2026, Applied Digital's stock price reflects market expectations regarding its future growth potential, necessitating investor attention to the relationship between financial performance and market reactions.
- Investor Considerations: Ahead of the next significant market move, investors must grasp the catalysts and risks influencing Applied Digital's stock price, including shifts in technology execution and market demand.
- Uncertain Future Outlook: While the company's expansion potential in the AI data center sector is substantial, its ability to achieve sustainable cash flow and margin improvements will directly impact the long-term trajectory of its stock price.
See More
Applied Digital: Leading the AI Data Center Boom
- Significant Revenue Growth: Applied Digital reported a 250% year-over-year revenue increase in Q2 2023, reaching $127 million, while narrowing its net loss to $37 million, indicating strong financial improvement and robust demand in the AI data center sector.
- Long-Term Contracts Secured: The company has signed an $11 billion, 15-year contract with CoreWeave for the operation of the Polaris Forge 1 facility, alongside a 15-year lease for 200 megawatts with a U.S. hyperscaler, expected to generate an additional $5 billion in revenue.
- Clear Expansion Plans: Polaris Forge 2 is set to open in 2026, with a third facility planned for 2027, and as these facilities come online, Applied Digital anticipates achieving $1 billion in net operating income within five years, showcasing its strong market potential.
- Analyst Ratings Optimistic: Wall Street analysts are bullish on Applied Digital, with 100% of 14 analysts rating it a buy, and a median price target of $43.50 indicating a potential 22% return, despite profitability being constrained by high capital investments in the short term.
See More
Applied Digital Sees Significant Growth in AI Data Centers
- Significant Revenue Growth: Applied Digital reported a 250% year-over-year revenue increase in Q2 2023, reaching $127 million, while narrowing its net loss to $37 million, significantly improving from a $0.63 loss per share in the same quarter last year, indicating strong growth potential in the AI data center sector.
- Long-Term Contracts Signed: The company secured an $11 billion, 15-year contract with CoreWeave for the construction of the Polaris Forge 1 facility in North Dakota, providing a stable revenue stream and enhancing its market position.
- Expansion Plans: The Polaris Forge 2 facility is expected to open in 2026, with a 15-year lease signed for 200 megawatts of capacity with a U.S. hyperscaler, projected to generate an additional $5 billion in revenue, further solidifying its leadership in the high-performance computing market.
- Analyst Ratings Optimistic: Currently, 100% of the 14 analysts covering Applied Digital rate it as a buy, with a target price of $43.50, indicating a potential 22% return, reflecting market confidence in the company's future growth prospects.
See More
