Applied Digital: Leading the AI Data Center Boom
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy APLD?
Source: Fool
- 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.
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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's Stock Surges 400% Amid AI Infrastructure Boom
- Significant Stock Surge: Applied Digital's stock price skyrocketed by 400% over the past year, primarily driven by long-term lease contracts with cloud infrastructure providers, highlighting the company's robust performance in the AI infrastructure market.
- Valuable Lease Contracts: The company has signed lease contracts worth $16 billion for 600 megawatts of AI data center capacity, which is expected to lay a solid foundation for future revenue growth and further solidify its market position.
- Revenue Growth Expectations: Applied Digital anticipates meaningful revenue growth over the next 18 to 24 months, with projected revenue for the current fiscal year expected to increase by 61% to $347 million, reflecting strong market demand and execution capabilities.
- Massive Market Potential: With the construction of new data centers and accelerating lease revenue, the company expects future revenues to reach $573 million, potentially increasing its market cap to $18.3 billion, showcasing its significant growth potential in the AI market.
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 Transforms to AI Infrastructure, Stock Price Soars
- Stock Surge: Applied Digital's stock price surged by 25.50% after pivoting to AI infrastructure, rising from $7.10 to $34.95, indicating strong market recognition of its new strategy and reflecting investor confidence in AI growth potential.
- Revenue Explosion: The company's revenue skyrocketed from $55 million to $264 million over the last four reported quarters, demonstrating robust market demand in the AI data center sector, with commitments for up to $16 billion in revenue over the next 15 years, showcasing significant business expansion potential.
- Debt Risk: Despite impressive revenue growth, Applied Digital's debt soared from $42 million in Q1 2024 to nearly $2.6 billion, with most of it carrying a high interest rate of 9.25%, which could threaten the company's financial health, especially as profitability remains unachieved.
- Customer Concentration Risk: Applied Digital's heavy reliance on CoreWeave, which accounts for the majority of its future lease income, poses a significant risk, particularly as CoreWeave itself faces profitability and debt challenges, potentially exposing Applied Digital to substantial risks during market fluctuations.
See More
Applied Digital's AI Strategy and Risks
- Revenue Surge: Applied Digital's revenue skyrocketed from $55 million in 2023 to $264 million, indicating strong growth potential in the AI infrastructure sector and positioning the company favorably in a rapidly expanding market.
- Future Revenue Commitments: The company has secured commitments for up to $16 billion in future revenue, reflecting robust market demand in the AI space and suggesting significant revenue growth potential over the next 15 years, further solidifying its market position.
- Escalating Debt Risks: As of Q1 2024, Applied Digital's debt surged from $42 million to nearly $2.6 billion, with most of it carrying a high interest rate of 9.25%, which poses a threat to the company's financial stability, especially as profitability remains unachieved.
- Customer Concentration Risk: Applied Digital's heavy reliance on CoreWeave, which is the primary source of its future lease income, raises concerns, particularly as CoreWeave itself is unprofitable, creating a significant risk for Applied Digital in the event of market fluctuations.
See More
Applied Digital Faces Significant Risks as Debt Soars
- Debt Surge: Applied Digital's debt skyrocketed from $44 million to $2.6 billion in under two years, resulting in a debt-to-equity ratio exceeding 125%, which significantly increases the cost and risk of future financing for the company.
- Customer Dependency Risk: The company's high-performance computing (HPC) business relies almost entirely on a single customer, CoreWeave, which poses a major risk as future revenue is heavily dependent on this relationship, leaving little room for negotiation.
- Construction Deadline Pressure: If Applied Digital fails to meet construction deadlines, CoreWeave can terminate the lease penalty-free, risking the loss of $11 billion in future revenue, which exacerbates the financial strain on the company.
- Lack of Profitability: Despite strong market demand for AI infrastructure, Applied Digital reported a loss of $125 million over the past 12 months, indicating insufficient operational capacity under high debt levels, prompting investors to carefully assess its future profitability potential.
See More
Applied Digital's Stock Surges 400% Amid AI Infrastructure Boom
- Significant Stock Surge: Applied Digital's stock price skyrocketed by 400% over the past year, primarily driven by long-term lease contracts with cloud infrastructure providers, highlighting the company's robust performance in the AI infrastructure market.
- Valuable Lease Contracts: The company has signed lease contracts worth $16 billion for 600 megawatts of AI data center capacity, which is expected to lay a solid foundation for future revenue growth and further solidify its market position.
- Revenue Growth Expectations: Applied Digital anticipates meaningful revenue growth over the next 18 to 24 months, with projected revenue for the current fiscal year expected to increase by 61% to $347 million, reflecting strong market demand and execution capabilities.
- Massive Market Potential: With the construction of new data centers and accelerating lease revenue, the company expects future revenues to reach $573 million, potentially increasing its market cap to $18.3 billion, showcasing its significant growth potential in the AI market.
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 Transforms to AI Infrastructure, Stock Price Soars
- Stock Surge: Applied Digital's stock price surged by 25.50% after pivoting to AI infrastructure, rising from $7.10 to $34.95, indicating strong market recognition of its new strategy and reflecting investor confidence in AI growth potential.
- Revenue Explosion: The company's revenue skyrocketed from $55 million to $264 million over the last four reported quarters, demonstrating robust market demand in the AI data center sector, with commitments for up to $16 billion in revenue over the next 15 years, showcasing significant business expansion potential.
- Debt Risk: Despite impressive revenue growth, Applied Digital's debt soared from $42 million in Q1 2024 to nearly $2.6 billion, with most of it carrying a high interest rate of 9.25%, which could threaten the company's financial health, especially as profitability remains unachieved.
- Customer Concentration Risk: Applied Digital's heavy reliance on CoreWeave, which accounts for the majority of its future lease income, poses a significant risk, particularly as CoreWeave itself faces profitability and debt challenges, potentially exposing Applied Digital to substantial risks during market fluctuations.
See More
Applied Digital's AI Strategy and Risks
- Revenue Surge: Applied Digital's revenue skyrocketed from $55 million in 2023 to $264 million, indicating strong growth potential in the AI infrastructure sector and positioning the company favorably in a rapidly expanding market.
- Future Revenue Commitments: The company has secured commitments for up to $16 billion in future revenue, reflecting robust market demand in the AI space and suggesting significant revenue growth potential over the next 15 years, further solidifying its market position.
- Escalating Debt Risks: As of Q1 2024, Applied Digital's debt surged from $42 million to nearly $2.6 billion, with most of it carrying a high interest rate of 9.25%, which poses a threat to the company's financial stability, especially as profitability remains unachieved.
- Customer Concentration Risk: Applied Digital's heavy reliance on CoreWeave, which is the primary source of its future lease income, raises concerns, particularly as CoreWeave itself is unprofitable, creating a significant risk for Applied Digital in the event of market fluctuations.
See More
Applied Digital Faces Significant Risks as Debt Soars
- Debt Surge: Applied Digital's debt skyrocketed from $44 million to $2.6 billion in under two years, resulting in a debt-to-equity ratio exceeding 125%, which significantly increases the cost and risk of future financing for the company.
- Customer Dependency Risk: The company's high-performance computing (HPC) business relies almost entirely on a single customer, CoreWeave, which poses a major risk as future revenue is heavily dependent on this relationship, leaving little room for negotiation.
- Construction Deadline Pressure: If Applied Digital fails to meet construction deadlines, CoreWeave can terminate the lease penalty-free, risking the loss of $11 billion in future revenue, which exacerbates the financial strain on the company.
- Lack of Profitability: Despite strong market demand for AI infrastructure, Applied Digital reported a loss of $125 million over the past 12 months, indicating insufficient operational capacity under high debt levels, prompting investors to carefully assess its future profitability potential.
See More
