Applied Digital (APLD) Stock Could Be 11.8% Undervalued After $5.2b AI Lease

The trigger for Applied Digital (APLD) stock is a new 15-year take-or-pay lease at its Delta Forge 2 AI campus, valued at about US$5.2b in base contracted revenue with renewal options.

See our latest analysis for Applied Digital.

The new lease and recent US$350m credit facility come as Applied Digital’s share price has moved sharply, with a 90-day share price return of 70.91% and a 1-year total shareholder return above 300%, suggesting strong momentum tied to its AI infrastructure build out.

If this kind of AI infrastructure story interests you, it could be worth scanning other data center and compute-focused opportunities using our 49 AI infrastructure stocks

After such a strong run, Applied Digital’s recent share price and rich pipeline of contracted AI lease revenue raise a key question for investors: is the stock still pricing in too little, or is the market already baking in the next leg of growth?

Most Popular Narrative: 11.8% Undervalued

Applied Digital’s most followed narrative points to a fair value of $52.80 versus the last close of $46.59, so the focus falls squarely on how long-term AI contracts and power access might support that gap.

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, representing 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.

Read the complete narrative.

Want to see what sits behind that projected fair value for Applied Digital? The narrative leans on rapid top line expansion, a sharp profitability swing, and a future earnings multiple that assumes investors will pay up for those outcomes.

Result: Fair Value of $52.80 (UNDERVALUED)

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

However, the Applied Digital story still hinges on a few pressure points, particularly heavy debt funding and reliance on a small group of large hyperscaler contracts that could change.

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

Another View: Applying a Simple Multiple To Applied Digital

While the most popular narrative for Applied Digital points to an 11.8% gap to fair value, the current P/S ratio of 41.7x paints a different picture. That is far above the US IT industry at 1.8x, the peer average at 8x, and even the fair ratio of 28.2x. This suggests the market could move toward a lower multiple over time. For investors, the tension is whether those AI contracts fully justify paying so far ahead of peers, or if sentiment is stretching the story too far.

To pressure test whether this richer valuation still lines up with your own expectations for Applied Digital, it can help to walk through our detailed multiple based breakdown in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mix of excitement and concern around Applied Digital, this is a moment to move quickly, review the underlying data, and decide where you stand using the 1 key reward and 4 important warning signs.

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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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