Applied Digital (NASDAQ:APLD) Stock Jumps 5% - Should You Buy?

Key Points

• Applied Digital shares rose 5% to $25.38 on heavier-than-average trading after the company brought an additional 75 megawatts of AI infrastructure online at its Polaris Forge 1 campus.
• Polaris Forge 1 is now operating at 250 MW and is fully leased, potentially supporting higher contracted revenue and utilization as AI and high-performance-computing demand grows.
• Despite bullish analyst targets and a consensus “Moderate Buy” rating with a $60.88 price target, investors face significant risks, including operating losses, high leverage, volatile trading, a recent earnings miss, and uncertainty over revenue conversion.

Applied Digital Corporation (NASDAQ:APLD - Get Free Report) rose 5% during mid-day trading on Friday. The company traded as high as $26.85 and last traded at $25.38. 26,203,996 shares traded hands during mid-day trading, an increase of 16% from the average session volume of 22,567,428 shares. The stock had previously closed at $24.16.

Key Stories Impacting Applied Digital

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

• Positive Sentiment: Applied Digital brought an additional 75 megawatts of AI infrastructure online by completing three 25 MW data halls. Fully operational critical IT load at Polaris Forge 1 has now reached 250 MW, improving the company’s ability to serve high-performance-computing and AI customers. Applied Digital Brings an Additional 75 MW of AI Infrastructure Online at Polaris Forge 1
• Positive Sentiment: The Polaris Forge 1 campus is fully leased, so the added capacity is viewed as a path toward higher contracted revenue and greater utilization rather than speculative construction. The milestone also moves the site closer to its full planned capacity. Applied Digital adds 75 MW of AI capacity in North Dakota
• Neutral Sentiment: Management emphasized that power availability is only the starting point, suggesting additional opportunity to deploy compute infrastructure as AI demand grows. However, the announcement did not provide new financial guidance or details on the timing and profitability of revenue conversion.
• Negative Sentiment: Investors continue to face execution and valuation risk. Applied Digital has been highly volatile, recently traded well below its yearly high, and previously reported a quarterly earnings miss despite strong year-over-year revenue growth. The company’s substantial leverage and ongoing losses could amplify downside if customer deployments or data-center expansion are delayed.

Wall Street Analysts Forecast Growth

Several equities research analysts have recently commented on APLD shares. Needham & Company LLC reaffirmed a "buy" rating and set a $83.00 target price on shares of Applied Digital in a report on Tuesday, July 28th. Zacks Research cut Applied Digital from a "hold" rating to a "strong sell" rating in a research note on Wednesday, August 26th. B. Riley Financial restated a "buy" rating and set a $75.00 price objective (up from $66.00) on shares of Applied Digital in a report on Monday, August 3rd. Lake Street Capital upped their price objective on shares of Applied Digital from $70.00 to $90.00 and gave the company a "buy" rating in a research note on Tuesday, June 9th. Finally, Craig Hallum upped their price objective on shares of Applied Digital from $75.00 to $79.00 and gave the company a "buy" rating in a research note on Tuesday, June 9th. Three analysts have rated the stock with a Strong Buy rating, thirteen have issued a Buy rating, two have issued a Hold rating and two have assigned a Sell rating to the company's stock. Based on data from MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus price target of $60.88.

Applied Digital Price Performance

The stock has a fifty day moving average price of $27.24 and a 200-day moving average price of $32.61. The company has a market cap of $7.40 billion, a PE ratio of -28.52 and a beta of 5.99. The company has a debt-to-equity ratio of 2.88, a current ratio of 4.01 and a quick ratio of 4.01.

Applied Digital (NASDAQ:APLD - Get Free Report) last issued its quarterly earnings results on Monday, July 27th. The company reported ($0.39) earnings per share for the quarter, missing analysts' consensus estimates of ($0.09) by ($0.30). Applied Digital had a negative net margin of 37.78% and a negative return on equity of 16.42%. The business had revenue of $240.35 million for the quarter, compared to analysts' expectations of $96.85 million. During the same quarter in the prior year, the firm posted ($0.24) EPS. The business's quarterly revenue was up 406.3% compared to the same quarter last year. On average, equities analysts expect that Applied Digital Corporation will post -1.09 earnings per share for the current year.

Insider Buying and Selling

In other Applied Digital news, Director Richard Nottenburg sold 75,000 shares of Applied Digital stock in a transaction dated Tuesday, August 4th. The stock was sold at an average price of $31.15, for a total transaction of $2,336,250.00. Following the transaction, the director owned 133,378 shares of the company's stock, valued at $4,154,724.70. The trade was a 35.99% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which is available through this hyperlink. Insiders own 9.50% of the company's stock.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in APLD. FNY Investment Advisers LLC purchased a new position in shares of Applied Digital during the 2nd quarter valued at $37,000. Osbon Capital Management LLC acquired a new position in Applied Digital in the 4th quarter worth about $28,000. Bartlett & CO. Wealth Management LLC raised its stake in shares of Applied Digital by 244.3% during the 1st quarter. Bartlett & CO. Wealth Management LLC now owns 1,205 shares of the company's stock worth $29,000 after purchasing an additional 855 shares in the last quarter. Ancora Advisors LLC bought a new stake in shares of Applied Digital in the 2nd quarter valued at approximately $56,000. Finally, Creative Financial Designs Inc. ADV grew its stake in shares of Applied Digital by 691.8% in the 2nd quarter. Creative Financial Designs Inc. ADV now owns 1,536 shares of the company's stock valued at $57,000 after buying an additional 1,342 shares in the last quarter. Institutional investors and hedge funds own 65.67% of the company's stock.

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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