The consensus analyst price target for Applied Digital has increased from $21.11 to $27.00. Analysts cite strong leasing momentum with AI-focused hyperscale customers and recent high-value agreements as key drivers for this upward revision.
Analyst Commentary
Bullish Takeaways- Bullish analysts continue to raise price targets, reflecting confidence in Applied Digital’s growth trajectory and strong leasing momentum with major AI-focused customers.
- Recent long-term agreements for significant data center capacity, including a full 400MW lease at Ellendale, provide substantial revenue visibility and reinforce the company’s market position.
- The company’s expanding pipeline of hyperscale customers, combined with advanced contract discussions for new agreements, suggests momentum and stability in demand.
- Recent industry transactions in the datacenter space indicate higher cap rates and multiples, signaling potential for further upside in Applied Digital’s valuation as market recognition improves.
- Some bearish analysts highlight that recent outperformance in quarterly results was largely driven by one-time revenue contributions, which may not be repeatable and have limited impact on long-term valuation.
- Ongoing "lumpiness" in technical revenue and the reliance on future leasing activity introduce execution risk and could create volatility in near-term results.
- Not all market participants appear to be fully recognizing the value of Applied Digital’s current pipeline, which may result in continued undervaluation until additional agreements are secured and executed.
What's in the News
- Applied Digital raised $50 million in a private placement round by issuing a promissory note with 8% annual interest along with an additional 1.50% per month. The funding included participation from new lender Macquarie Equipment Capital Inc. (Key Developments)
- The company finalized a new lease agreement with CoreWeave for an additional 150MW at its Polaris Forge 1 Campus in Ellendale, North Dakota. This brings its total anticipated contracted lease revenue to approximately $11 billion. (Key Developments)
- Applied Digital will break ground in September 2025 on Polaris Forge 2, a $3 billion, 280-megawatt AI Factory near Harwood, North Dakota. The company has plans for further expansion and has secured power through Cass County Electric Cooperative. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has increased substantially from $21.11 to $27.00. This reflects a markedly more optimistic outlook.
- Discount Rate has edged down slightly from 9.15% to 9.10%, suggesting a marginal decrease in perceived risk.
- Revenue Growth projections remain unchanged at an elevated 73.70%.
- Net Profit Margin is steady at 13.52%, indicating consistent profitability expectations.
- Future P/E ratio has risen significantly from 86x to 110x, which implies greater anticipated earnings growth and increased market confidence in future performance.
Disclaimer
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