APLD Stock Risk & Deep Value Analysis
Applied Digital Corp
DVR Score
out of 10
What You Need to Know About APLD Stock
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We ran APLD through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Aggressive. Here's what we found.
APLD Risk Analysis & Red Flags
What Could Go Wrong
The company's substantial $5B debt load, coupled with its aggressive build-out strategy, makes it highly vulnerable. If demand from its primary tenant, CoreWeave, significantly slows, or if new data center capacity doesn't quickly secure high-paying clients, APLD could face severe liquidity challenges or be forced into highly dilutive equity raises or debt restructuring.
Risk Matrix
Overall
Aggressive
Financial
High
Market
Medium
Competitive
Medium
Execution
High
Regulatory
Low
Red Flags
- ⚠
Total debt of $5B against $6.25B in assets, creating high leverage.
- ⚠
Significant customer concentration with CoreWeave, requiring additional credit support.
- ⚠
GAAP net loss of $100.9M in Q3 FY2026, worsening profitability on a GAAP basis.
- ⚠
SG&A expenses up 251% YoY, pressuring operating margins.
- ⚠
Presence of nonrecurring tenant fit-out revenue ($18.9M in Q3) that skews reported growth.
Upcoming Risk Events
- 📅
Failure to secure new tenants for significant new capacity
- 📅
Higher-than-expected interest rates impacting debt servicing costs
- 📅
Any negative developments with key tenant CoreWeave
When to Reconsider
- 🚪
Exit if quarterly revenue growth decelerates below 50% YoY for two consecutive quarters.
- 🚪
Sell if total debt-to-assets ratio exceeds 90% or cash position falls below $1B.
- 🚪
Significant negative news regarding CoreWeave's financial health or relationship with APLD.
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Investment Thesis
Applied Digital is a high-conviction, high-risk play on the exponential growth of AI/HPC compute demand. By aggressively building out specialized data center infrastructure, largely financed by debt, the company aims to become a critical provider in this nascent but rapidly expanding market. While fraught with financial risks due to massive debt and unprofitability, its operational momentum and strategic positioning could lead to substantial long-term value creation as AI adoption accelerates.
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APLD Price Targets & Strategy
12-Month Target
$39.50
Bull Case
$59.00
Bear Case
$19.50
Valuation Basis
Based on 11x P/S multiple applied to projected FY2027 revenue of $1.0B (reflecting aggressive growth but tempered by high debt) = $11B Market Cap / 280M shares outstanding.
Entry Strategy
Consider dollar-cost averaging on pullbacks towards the $24-$26 range (recent support zone). Accumulate below $28.
Exit Strategy
Take partial profits at $40, reassess at $55+. Stop loss if price closes below $20 for two consecutive days.
Portfolio Allocation
5% for aggressive growth investors, given the high-risk, high-reward profile.
Price Targets & Strategy
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Is APLD Financially Healthy?
Valuation
P/E Ratio
28.45
Forward P/E
15.20
EV/EBITDA
-12.30
PEG Ratio
0.85
Price/Book
2.18
Price/Sales
4.62
Profitability
Gross Margin
27.86%
Operating Margin
-43.76%
Net Margin
-42.13%
Return on Equity
-15.08%
Revenue Growth
128.91%
EPS
$-0.72
Balance Sheet
Current Ratio
0.77
Quick Ratio
0.75
Debt/Equity
1.11
Total Debt
$135.00M
Cash & Equivalents
$125.00M
Cash Flow
Operating Cash Flow
-$45.00M
Free Cash Flow
-$78.00M
EBITDA
-$98.00M
Other
Beta (Volatility)
5.84
Does APLD Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Expanding
Moat Sources
3 Identified
The high capital expenditure required to build and optimize specialized AI/HPC data centers creates a barrier to entry. Long-term contracts with key tenants and specialized infrastructure can lead to switching costs. However, technology advancements and potential entry of hyperscalers or other well-funded competitors could challenge this moat.
Moat Erosion Risks
- •Technological obsolescence of current data center designs if new cooling or power solutions emerge rapidly.
- •Increased competition from large cloud providers (hyperscalers) expanding their specialized HPC offerings.
- •Inability to continually attract and retain high-value tenants for new capacity.
APLD Competitive Moat Analysis
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APLD Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral. Retail sentiment is mixed; optimism for AI growth is tempered by financial risks and dilution concerns.
Institutional Sentiment
Neutral. While significant debt financing suggests some institutional confidence, the post-earnings stock drop indicates skepticism regarding profitability. No explicit analyst upgrades/downgrades were provided in the research.
Insider Activity (Form 4)
No Form 4 filings or insider trading activity disclosed in provided search results for the last 90 days.
Options Flow
Normal options activity; no specific unusual put/call ratio or large block trades indicating significant institutional positioning was found in the provided research.
Earnings Intelligence
Next Earnings
Estimated early-July 2026 (for Q4 FY2026)
Surprise Probability
Medium
Historical Earnings Pattern
Stock tends to be volatile around earnings, with revenue beats often overshadowed by concerns regarding profitability and capital structure, as seen in the recent 5.5% drop despite a revenue beat.
Key Metrics to Watch
Competitive Position
Top Competitor
Digital Realty (DLR)
Market Share Trend
Gaining market share in the specialized, high-growth AI/HPC data center segment through aggressive capacity build-out.
Valuation vs Peers
Trading at a higher revenue multiple (P/S ~12-15x) than many traditional data center REITs due to its high growth and AI/HPC focus, but at a significant discount to pure-play AI infrastructure players like NVIDIA on a forward P/E (as APLD is not yet GAAP profitable).
Competitive Advantages
- •Specialized infrastructure optimized for high-density AI/HPC workloads (e.g., liquid cooling).
- •Strategic partnerships with key players like CoreWeave, which is backed by Nvidia.
- •Speed of deployment and scale in an underserved niche of the data center market.
Market Intelligence
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What Could Drive APLD Stock Higher?
Near-Term (0-6 months)
- •Q4 FY2026 Earnings Report (Estimated early-July 2026)
- •Onboarding of new HPC capacity at Polaris Forge 1 & 2 sites
- •Announcements of new strategic tenant contracts beyond CoreWeave
Medium-Term (6-18 months)
- •Further expansion into new geographical markets or specialized HPC niches
- •Stabilization and full utilization of Delta Forge 1 facility
- •Conversion of non-recurring tenant fit-out revenue into stable lease revenue
Long-Term (18+ months)
- •Becoming a leading independent provider of AI/HPC infrastructure
- •Significant technological advancements in liquid cooling or power efficiency for data centers
- •Widespread enterprise adoption of generative AI requiring external HPC resources
Catalysts & Growth Drivers
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What's the Bull Case for APLD?
- ✓
Acceleration in contracted revenue backlog and new customer announcements.
- ✓
Consistent improvement in adjusted EBITDA margins and a clear path to GAAP profitability.
- ✓
Successful refinancing or deleveraging of existing debt without significant dilution.
Bull Case Analysis
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How Applied Digital Corp Makes Money
Applied Digital makes money by designing, building, and operating large-scale, high-density data centers primarily for high-performance computing (HPC) and artificial intelligence (AI) workloads. They lease out their specialized infrastructure (like server racks, cooling, and power) to institutional clients and cloud service providers who need vast amounts of compute power. Essentially, they provide the physical 'land and utilities' for the digital economy's most demanding applications, acting as a crucial backbone for the AI revolution.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Applied Digital Corp (APLD)?
As of April 13, 2026, Applied Digital Corp has a DVR Score of 6.2 out of 10, placing it in the "Solid Pick" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Applied Digital Corp?
Applied Digital Corp's market capitalization is approximately $7.5B..
What is the risk level for APLD stock?
Our analysis rates Applied Digital Corp's overall risk as Aggressive. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of APLD?
Applied Digital Corp currently has a price-to-earnings (P/E) ratio of 28.4. This is in line with broader market averages.
Is Applied Digital Corp's revenue growing?
Applied Digital Corp has reported revenue growth of 128.9%. The company is showing strong top-line momentum.
Is APLD stock profitable?
Applied Digital Corp has a profit margin of -42.1%. The company is currently unprofitable.
How often is the APLD DVR analysis updated?
Our AI-powered analysis of Applied Digital Corp is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 13, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for APLD (Applied Digital Corp) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.