Applied Digital (APLD) Draws UBS Attention, Is The Stock Cheap Or Pricey?
Applied Digital (APLD) moved into focus after UBS initiated coverage on the AI data center operator, grouping it with peers that are seen as well placed in AI infrastructure and power access.
Applied Digital’s share price has been volatile, with the stock down 30.9% on a 90 day share price return and 6.2% on a 30 day share price return, even as analyst coverage has sharpened focus on its AI data center shift. Yet the longer view tells a different story, with a 1 year total shareholder return of 19.8% and a 3 year total shareholder return above 3x. This suggests that recent weakness follows a very strong multi year run rather than a clear break in the broader momentum story.
Compare Applied Digital’s AI data center story with other potential beneficiaries of the same trend by scanning 87 AI infrastructure stocks built around this power and compute theme.
Bulls see Applied Digital as a high growth AI landlord trading on old crypto fears. Bears focus on losses, debt and customer concentration. Recent price weakness raises a simple issue: Which story does the current valuation reflect?
Most Popular Narrative: 60% Undervalued
Applied Digital’s most followed narrative pegs fair value at $68.35 against a last close of $27.06, which frames today’s pullback as a large gap between contracted AI data center economics and what the market is currently willing to pay.
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.
See why 253 investors see Applied Digital as 60% undervalued.
Result: Fair Value of $68.35 (UNDERVALUED)
Still, Applied Digital’s heavy debt load and reliance on a few hyperscaler tenants could quickly challenge that upside story if funding or contract terms shift against it.
Find out about the key risks to this Applied Digital narrative.
Another View On Applied Digital’s Valuation
The fair value narrative around Applied Digital leans heavily on long-term AI leases and future earnings. A simpler check looks at today’s P/S ratio of 12.9x versus a US IT average of 2x and a fair ratio of 5.9x. This comparison points to rich pricing and less margin for error if growth or margins disappoint.
That gap raises a practical question for you as an investor. How comfortable are you paying more than double the fair ratio for this growth story if execution or funding conditions change?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
There are mixed messages in the Applied Digital story so far. If you want to act while sentiment is split, pull up the full picture and weigh both sides through 1 key reward and 3 important warning signs
Looking For More Investment Ideas Beyond Applied Digital?
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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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