Applied Digital (NASDAQ:APLD) Stock Falls 9.4% - Should You Sell?

Key Points

• Applied Digital shares fell 9.4% to about $20.33 amid broader weakness in AI data-center stocks and concerns about the sector’s reliance on costly financing and potential dilution.
• The company’s growth outlook remains strong, with fiscal first-quarter revenue of approximately $341.9 million, about $36 billion in contracted revenue and plans to add more than 600 megawatts of capacity over the next year.
• However, profitability and funding remain key risks: Applied Digital reported a $237.1 million GAAP net loss, carries a 3.90 debt-to-equity ratio and faces reduced fiscal 2027 EPS estimates, despite analysts maintaining an overall “Moderate Buy” consensus and a $62.25 average price target.

Shares of Applied Digital Corporation (NASDAQ:APLD - Get Free Report) were down 9.4% on Wednesday. The stock traded as low as $20.01 and last traded at $20.33. Approximately 29,816,432 shares were traded during trading, an increase of 30% from the average session volume of 22,910,643 shares. The stock had previously closed at $22.44.

Applied Digital News Roundup

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

• Positive Sentiment: Applied Digital reported fiscal first-quarter 2027 revenue of approximately $341.9 million, up 322% year over year. The company also has about $36 billion in contracted revenue and plans to bring more than 600 megawatts online over the next 12 months, supporting its long-term growth story. Applied Digital latest update
• Positive Sentiment: Northland Securities maintained an Outperform rating and an $82 price target, suggesting substantial potential upside if Applied Digital successfully executes its expansion plans. Applied Digital analyst coverage
• Neutral Sentiment: The company’s planned Finland expansion and accelerated power-capacity buildout could strengthen its AI infrastructure position, but investors are focused on how quickly new facilities can become operational and generate cash flow. What Could Derail Applied Digital Stock?
• Negative Sentiment: Despite strong revenue growth, Applied Digital posted a much wider GAAP net loss of $237.1 million. Data centers require major upfront capital before tenants pay, raising concerns about cash needs, debt and possible shareholder dilution. Applied Digital expansion financing
• Negative Sentiment: Northland reduced its projected EPS for fiscal 2027 to a loss of $1.50 per share from a loss of $0.44, while lowering quarterly forecasts as well. Although the firm retained its bullish rating, the estimate cuts reinforce concerns that profitability may remain distant.
• Negative Sentiment: Broader AI data-center stocks are weakening after Cipher Digital’s $850 million zero-coupon convertible-note financing highlighted the sector’s dependence on expensive capital markets. That financing and dilution concern is weighing on Applied Digital by association. AI data-center stocks decline

Wall Street Analyst Weigh In

A number of equities research analysts have recently issued reports on APLD shares. B. Riley Financial reissued a "buy" rating and issued a $75.00 price target (up from $66.00) on shares of Applied Digital in a research note on Monday, August 3rd. Citigroup reaffirmed a "market outperform" rating on shares of Applied Digital in a research report on Thursday, October 8th. Needham & Company LLC dropped their target price on shares of Applied Digital from $83.00 to $70.00 and set a "buy" rating for the company in a report on Thursday, October 8th. Wells Fargo & Company reiterated an "overweight" rating and issued a $55.00 target price (up from $50.00) on shares of Applied Digital in a report on Thursday, October 8th. Finally, Rothschild & Co Redburn set a $22.00 price target on Applied Digital and gave the stock a "neutral" rating in a research note on Monday, September 21st. Three research analysts have rated the stock with a Strong Buy rating, twelve have given a Buy rating, two have issued a Hold rating and two have issued a Sell rating to the company. According to MarketBeat.com, Applied Digital has a consensus rating of "Moderate Buy" and an average target price of $62.25.

Applied Digital Price Performance

The company has a 50 day moving average of $26.70 and a 200 day moving average of $32.44. The company has a debt-to-equity ratio of 3.90, a quick ratio of 2.56 and a current ratio of 2.56. The stock has a market capitalization of $6.15 billion, a price-to-earnings ratio of -12.40 and a beta of 5.99.

Applied Digital (NASDAQ:APLD - Get Free Report) last announced its quarterly earnings data on Wednesday, October 7th. The company reported ($0.01) earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.30) by $0.29. Applied Digital had a negative return on equity of 27.21% and a negative net margin of 51.28%. The business had revenue of $300.39 million during the quarter, compared to analysts' expectations of $116.29 million. During the same quarter last year, the business posted ($0.03) EPS. The business's quarterly revenue was up 367.8% compared to the same quarter last year. As a group, equities research analysts anticipate that Applied Digital Corporation will post -1.93 EPS for the current year.

Insiders Place Their Bets

In related news, Director Richard Nottenburg sold 75,000 shares of Applied Digital stock in a transaction that occurred on Tuesday, August 4th. The shares were sold at an average price of $31.15, for a total value of $2,336,250.00. Following the completion of the transaction, the director owned 133,378 shares in the company, valued at $4,154,724.70. The trade was a 35.99% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. 9.50% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Applied Digital

Large investors have recently modified their holdings of the company. Equitec Proprietary Markets LLC acquired a new stake in Applied Digital during the 2nd quarter worth $312,349,000. Situational Awareness LP increased its stake in Applied Digital by 18.9% in the first quarter. Situational Awareness LP now owns 13,478,438 shares of the company's stock valued at $319,978,000 after purchasing an additional 2,139,378 shares during the period. Hsbc Holdings PLC acquired a new position in Applied Digital in the fourth quarter valued at $29,510,000. Janus Henderson Group PLC raised its holdings in shares of Applied Digital by 318.5% in the first quarter. Janus Henderson Group PLC now owns 785,152 shares of the company's stock valued at $18,638,000 after buying an additional 597,548 shares during the last quarter. Finally, TFR Capital LLC. raised its holdings in shares of Applied Digital by 425.3% in the first quarter. TFR Capital LLC. now owns 372,960 shares of the company's stock valued at $9,497,000 after buying an additional 301,954 shares during the last quarter. 65.67% of the stock is owned by hedge funds and other institutional investors.

Applied Digital Company Profile

Applied Digital Corporation NASDAQ: APLD develops and operates digital infrastructure designed to support high-performance computing, artificial intelligence and other data-intensive applications. The company provides data-center capacity and related services to customers that require substantial computing power and electricity.

The company's business has included hosting infrastructure for cryptocurrency-mining operations and, increasingly, developing facilities for artificial intelligence and high-performance computing workloads.

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