A Look At Applied Digital (APLD) Valuation After US$2.15b High Yield Bond Financing For Oracle Data Centers

Why Applied Digital’s latest financing move matters

Applied Digital (APLD) has attracted attention after raising US$2.15b in a private high-yield bond offering to fund 200 megawatts of new data center capacity under a long-term lease with Oracle.

This financing turns a signed, not yet revenue-producing Oracle contract into a fully funded build. It also provides more visibility into how Applied Digital plans to convert its development pipeline into operating, income-generating assets.

See our latest analysis for Applied Digital.

Applied Digital’s latest financing update has arrived after a period of mixed share price momentum, with a 10.30% 90 day share price return but only a 0.92% year to date share price return, set against a very large 1 year total shareholder return that is more than triple the starting value.

If you are weighing what else might benefit from similar themes around AI data centers and compute, it could be worth scanning 35 AI infrastructure stocks

With Applied Digital’s shares returning 0.9% year to date but delivering a very large 1-year total shareholder return, and trading below the average analyst price target, is the recent pause a fresh entry point, or is the market already pricing in future growth?

Most Popular Narrative: 25.7% Undervalued

Applied Digital’s most followed narrative pegs fair value at $38.20 per share versus the last close at $28.37, putting a spotlight on how hyperscale contracts and heavy financing shape that gap.

The fair value for Applied Digital (APLD) is calculated using my fair value method by applying a 22x EV/EBITDA multiple to the 2027 projected Adjusted EBITDA of $485 million, reflecting the high-visibility cash flows from its 15-year hyperscale leases. This results in a fair value of $38.20 in local currency (USD). At the current price of $27.03, the stock is trading at a 29.2% discount to its intrinsic value.

Read the complete narrative.

If you want to understand why this narrative points to a higher price, focus on how multi year leases, future EBITDA and margin assumptions fit together. The entire view rests on long dated cash flows and a valuation multiple that assumes those targets are hit. You may want to explore which revenue ramp and profitability path sit underneath that headline fair value and how they link back to today’s loss making base.

Result: Fair Value of $38.20 (UNDERVALUED)

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

However, this depends on heavy debt funding and long dated hyperscale leases. As a result, delays, overruns, or tenant changes could quickly challenge the current optimism.

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

Another lens on valuation

The user narrative leans on future EBITDA and a 22x multiple, but the current P/S ratio of 30x tells a different story. That compares with 1.6x for the wider US IT sector, 4.8x for peers, and a fair ratio of 9x, which signals that a lot of optimism is already in the price.

For you as an investor, that gap means sentiment could shift quickly if growth or margins fall short of expectations, or offer upside if the business eventually grows into that richer multiple. Which risk matters more to you: missing further upside or being caught if sentiment cools?

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

Next Steps

Given the mix of enthusiasm and caution in this story, it makes sense to look at the numbers yourself and decide quickly where you stand, starting with 1 key reward and 3 important warning signs.

Looking for more investment ideas?

If you are serious about putting your money to work, do not stop at a single stock story. Widen your options with a focused set of ideas.

• Target value opportunities by scanning 55 high quality undervalued stocks that combine quality fundamentals with room for a more attractive pricing story.
• Prioritise resilience by checking out 74 resilient stocks with low risk scores built around companies with lower overall risk profiles.
• Hunt for future standouts by reviewing the screener containing 25 high quality undiscovered gems that most investors may not be watching yet.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com