Applied Digital (APLD): Is the Growth Story Reflected in Its Current Valuation?

Applied Digital (APLD) shares have caught attention lately thanks to a sharp 73% surge in the past month and a jump of 153% over the past 3 months. Investors are now watching how these rapid gains factor into the company’s future valuation.

See our latest analysis for Applied Digital.

Applied Digital’s share price has put on an impressive display not just in the past month, but over the broader year as well, with a 1-year total shareholder return of 229%. Recent momentum suggests renewed confidence in the company’s growth prospects and valuation story.

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With such remarkable gains posted in a short timeframe, investors now face a critical question: is Applied Digital undervalued relative to its growth potential, or has the recent surge already priced in the company’s future prospects?

Most Popular Narrative: 25% Overvalued

Despite enthusiastic price action, the most widely tracked narrative assigns a fair value notably below the recent closing price, raising questions about whether future growth is fully priced in or stretched beyond likely outcomes.

The company has recently secured long-term (15-year) leasing agreements with CoreWeave, a major AI hyperscaler, for its purpose-built AI/HPC data center campus, Polaris Forge 1. This represents a total of $7 billion in contracted revenue and a multi-year, recurring, and predictable revenue stream that directly supports future revenue growth and cash flow stability. Momentum in the data center segment is underpinned by surging demand for AI infrastructure. Applied Digital is leveraging its streamlined proprietary building designs to reduce build times from 24 months to 12 or 14 months, enabling faster scaling of capacity and greater capital efficiency, which is likely to benefit both revenue growth and net margin expansion.

Read the complete narrative.

Want to know what’s fueling such bold valuation forecasts? The key to this narrative is a blend of hyperscale contracts and rapid construction turnarounds, which set the stage for future profit margins that might surprise even seasoned investors. Curious about which specific assumptions drive this high fair value? Dive in to reveal the underlying metrics.

Result: Fair Value of $21.11 (OVERVALUED)

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

However, volatile crypto exposure and aggressive debt-fueled expansion could threaten Applied Digital’s growth story if market conditions shift or if capital access tightens.

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

Build Your Own Applied Digital Narrative

If you feel the numbers tell a different story or want to dig into the facts yourself, you can craft your own perspective in just a few minutes: Do it your way.

A great starting point for your Applied Digital research is our analysis highlighting 1 key reward 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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