Applied Digital (APLD): Assessing Valuation After a Sharp Pullback in a Triple-Digit Year-To-Date Rally

Applied Digital (APLD) has quietly become one of the bigger AI-infrastructure stories in the market, with the stock up almost 200% this year despite a sharp pullback this week.

See our latest analysis for Applied Digital.

The 1 year total shareholder return of 129.57% and year to date share price return of 194.62% show that, even after this week’s 17.52% one day share price drop and 28.43% 7 day share price decline, longer term momentum is still very much intact. The 90 day share price return of 18.09% suggests that investors are recalibrating near term risk rather than abandoning the broader AI infrastructure growth story.

If Applied Digital’s run has you thinking about what else could be setting up for big moves, it is worth exploring high growth tech and AI stocks as a starting point for other potential high growth tech and AI ideas.

With revenue still growing fast but profits lagging and the share price already up triple digits, the key question now is simple: Is Applied Digital still mispriced by a skeptical market, or is future growth already baked in?

Most Popular Narrative: 47.4% Undervalued

With the narrative fair value near $43.70 versus a last close of $22.98, the valuation case hinges on how quickly Applied Digital can scale AI data center earnings.

The accelerating industry need for high density, geographically distributed data centers to support AI and machine learning workloads places Applied Digital in a favorable position, capitalizing on digital transformation trends that are set to drive ongoing utilization growth, improved asset values, and ultimately earnings expansion over the next several years.

Read the complete narrative.

Curious how aggressive revenue ramps, shifting margins, and a lofty future earnings multiple all fit together, and why they still point to upside, not excess optimism?

Result: Fair Value of $43.70 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, significant crypto exposure and heavy, debt fueled expansion mean any slowdown in hyperscale leasing or utilization could quickly challenge the bullish narrative.

Find out about the key risks to this Applied Digital narrative.

Another View: Price Tag Gets Harder to Ignore

While the narrative fair value implies big upside, today’s price already bakes in a lot of hope. Applied Digital trades on a price to sales ratio of 45.8 times versus 4 times for peers and a 10.8 times fair ratio, leaving little room for execution slips or delays.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Applied Digital Narrative

If you see the numbers differently or want to stress test your own thesis, you can build a personalized narrative in minutes: Do it your way.

A great starting point for your Applied Digital research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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