Applied Digital (APLD) has recently become one of the hottest artificial intelligence (AI) infrastructure stocks to track. Most recently, following news that the company inked an important long-term deal with a hyperscaler, APLD stock surged by more than 12% on April 23.
There's little doubt that the AI data center sector is here to stay and that hyperscalers will be securing capacity for several years down the road. Indeed, it looks like companies with the capability and wherewithal to do so enjoy premium valuations. That appears to be the case for Applied Digital as well.
About Applied Digital Stock
Headquartered in Dallas, Texas, Applied Digital provides high-end data centers for artificial intelligence purposes. From a market capitalization perspective, Applied Digital could be seen as a risky growth company given its market cap of about $9.9 billion.
Still, APLD stock has gained in value by an impressive amount recently. In particular, after trading at a 52-week low of $4.20, APLD stock now trades closer to the $34 mark, although that remains far from its 52-week high of $42.27. Shares are up almost 5% in the past five days and up by nearly 42% over the past one month.
When looking at the valuation, however, another story emerges. The company has a steep price-to-sales (P/S) ratio of 72 times. Furthermore, it's worth noting that both its profit margin and return on equity are negative, coming in at -160.3% and -15.9%, respectively. Put another way, investors are betting heavily on future economies of scale as opposed to current earnings potential when it comes to Applied Digital.
Applied Digital Reports Q3 2026 Earnings
For its fiscal third quarter, Applied Digital posted revenue of $126.6 million, up 139% year-over-year (YOY). Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $44.1 million, with adjusted net income of $33.2 million, or $0.09 per share.
The firm also recorded GAAP net losses of $100.9 million, or $0.36 per share. Nevertheless, Applied Digital has seen a clear trend toward improved operational leverage.
What really matters is the recently signed 15-year lease agreement. This month, Applied Digital agreed on a $7.5 billion contract with an unnamed “high investment-grade hyperscaler,” with 300 megawatts of power at its Delta Forge 1 campus allocated specifically for AI and high-performance computing workloads.
With this move, Applied Digital has now secured contracts with a total of three hyperscalers. On top of this, the company expects to secure funding amounting to $600 million, with plans to raise a $300 million bridge loan and a $300 million revolving credit facility.
What Do Analysts Expect for Applied Digital Stock?
The sentiment among the analysts who follow Applied Digital stock is generally quite positive, with APLD earning a consensus “Strong Buy” rating. On the high end, the stock has a price target of $99, while Wall Street's lowest estimate is $36. On average, analysts expect APLD stock to trade near $50.17 over the next 12 months, implying potential upside of around 49% from here.
On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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