Applied Digital (NASDAQ:APLD) Stock Price Down 12.8% - Time to Sell?

Key Points

• Applied Digital shares fell 12.8% to $23.22 on heavy trading volume, extending a roughly 30% decline over the past month amid concerns about valuation, financing needs, power constraints and execution risks.
• The company reported exceptional growth, with quarterly revenue rising about 406% year over year to roughly $240–259 million and contracted lease value reaching $36 billion. However, GAAP losses remained significant, including a $0.39-per-share loss, negative margins and substantial debt and capital-spending requirements.
• Analyst sentiment is broadly bullish, with a consensus “Buy” rating and an average price target of $67.15, although some firms maintain sell or hold ratings. The wide range of views highlights the risk-reward debate surrounding Applied Digital’s AI data-center expansion.

Shares of Applied Digital Corporation (NASDAQ:APLD - Get Free Report) were down 12.8% during mid-day trading on Wednesday . The company traded as low as $22.93 and last traded at $23.22. 31,083,272 shares changed hands during trading, an increase of 27% from the average session volume of 24,564,672 shares. The stock had previously closed at $26.62.

Key Headlines Impacting Applied Digital

Here are the key news stories impacting Applied Digital this week:

• Positive Sentiment: Fiscal fourth-quarter revenue surged approximately 407% year over year to $258.7 million, exceeding Wall Street expectations, while adjusted earnings of $0.04 per share compared favorably with estimates for a loss. Management attributed the growth to strong demand for AI and high-performance-computing data centers. Applied Digital revenue quadruples on AI data center demand
• Positive Sentiment: Applied Digital said contracted lease value reached $36 billion, up 125% year over year, with approximately 1.4 gigawatts of contracted AI capacity across five campuses. The company is targeting a $1 billion annual net operating income run rate within a year, supported by long-term hyperscaler commitments, including contracts involving CoreWeave. Applied Digital expects $1B NOI run rate
• Positive Sentiment: Needham reaffirmed its “buy” rating and $83 price target, while Applied Digital highlighted financing and expansion plans for additional AI campuses. Needham reiterates buy rating
• Neutral Sentiment: Zacks Research upgraded APLD from “strong sell” to “hold,” indicating improving sentiment but not a bullish endorsement. Zacks Research
• Negative Sentiment: GAAP results remained weak: the company reported a $0.39-per-share loss versus a roughly $0.09 expected loss, alongside a negative net margin and negative return on equity. Investors may be concerned that rapid expansion requires substantial debt and capital spending.
• Negative Sentiment: APLD has fallen about 30% over the past month alongside former Bitcoin miners IREN and TeraWulf, reflecting concerns that elevated valuations, power constraints, financing needs and execution risks could undermine the AI data-center investment thesis. Data-center stock selloff analysis

Wall Street Analysts Forecast Growth

A number of equities analysts have recently commented on the company. Wall Street Zen lowered Applied Digital from a "hold" rating to a "sell" rating in a report on Saturday, April 11th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Applied Digital in a research note on Tuesday, July 21st. Morgan Stanley assumed coverage on Applied Digital in a report on Thursday, July 23rd. They set a "buy" rating and a $36.50 price objective on the stock. Lake Street Capital raised their target price on Applied Digital from $70.00 to $90.00 and gave the stock a "buy" rating in a research note on Tuesday, June 9th. Finally, Citizens Jmp lifted their target price on Applied Digital from $40.00 to $60.00 and gave the company a "market outperform" rating in a report on Thursday, May 21st. Three research analysts have rated the stock with a Strong Buy rating, twelve have given a Buy rating, one has given a Hold rating and one has given a Sell rating to the company's stock. According to data from MarketBeat.com, the company currently has an average rating of "Buy" and a consensus target price of $67.15.

Applied Digital Stock Performance

The firm has a market capitalization of $6.64 billion, a PE ratio of -26.09 and a beta of 5.67. The company has a quick ratio of 2.38, a current ratio of 2.38 and a debt-to-equity ratio of 1.65. The company has a 50-day moving average of $38.34 and a 200 day moving average of $34.52.

Applied Digital (NASDAQ:APLD - Get Free Report) last released its quarterly earnings results on Monday, July 27th. The company reported ($0.39) earnings per share for the quarter, missing the consensus estimate of ($0.09) by ($0.30). The business had revenue of $240.35 million during the quarter, compared to analysts' expectations of $96.85 million. Applied Digital had a negative net margin of 37.78% and a negative return on equity of 17.53%. The business's revenue was up 406.3% on a year-over-year basis. During the same period in the previous year, the business earned ($0.24) EPS. Equities research analysts predict that Applied Digital Corporation will post -1.1 EPS for the current year.

Insider Buying and Selling at Applied Digital

In related news, Director Richard N. Nottenburg sold 12,500 shares of the company's stock in a transaction that occurred on Thursday, April 30th. The shares were sold at an average price of $34.59, for a total value of $432,375.00. Following the transaction, the director directly owned 208,378 shares in the company, valued at approximately $7,207,795.02. This represents a 5.66% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. Company insiders own 9.50% of the company's stock.

Institutional Investors Weigh In On Applied Digital

Several hedge funds have recently bought and sold shares of APLD. Vanguard Group Inc. increased its holdings in shares of Applied Digital by 36.4% in the 4th quarter. Vanguard Group Inc. now owns 24,168,082 shares of the company's stock worth $592,601,000 after buying an additional 6,445,908 shares during the last quarter. Value Aligned Research Advisors LLC bought a new stake in shares of Applied Digital during the 4th quarter worth $138,380,000. Situational Awareness LP grew its position in Applied Digital by 87.0% in the fourth quarter. Situational Awareness LP now owns 11,339,060 shares of the company's stock worth $278,034,000 after acquiring an additional 5,274,905 shares in the last quarter. BNP Paribas Financial Markets grew its position in Applied Digital by 24,356.8% in the second quarter. BNP Paribas Financial Markets now owns 5,219,565 shares of the company's stock worth $52,561,000 after acquiring an additional 5,198,223 shares in the last quarter. Finally, Marex Group plc increased its stake in Applied Digital by 38,484.6% in the fourth quarter. Marex Group plc now owns 3,904,759 shares of the company's stock valued at $95,745,000 after acquiring an additional 3,894,639 shares during the last quarter. 65.67% of the stock is currently owned by institutional investors.

Applied Digital Company Profile

Applied Digital NASDAQ: APLD is a technology company specializing in the development and operation of large-scale digital infrastructure and sustainable Bitcoin mining solutions. Through its integrated platform, the company designs, builds and manages turnkey data center facilities while also providing comprehensive hosting services for cloud, colocation and enterprise computing needs. Applied Digital's modular approach to facility design enables rapid deployment of capacity and streamlined integration of power, cooling and network connectivity.

In addition to its data center business, Applied Digital operates a network of Bitcoin mining sites that leverage vertically integrated capabilities, including hardware procurement, mining farm engineering, energy management and real-time performance monitoring.

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