Key Takeaways
- Roth MKM’s Darren Aftahi maintains a Buy rating on Applied Digital with a $58 price target, identifying it as his preferred stock pick.
- The upcoming Q3 FY26 report on April 8 marks the first complete quarter where lease revenue will be fully captured in financial statements.
- Analyst consensus projects Q3 revenue at approximately $75.47M, representing a ~43% year-over-year increase, alongside an anticipated adjusted loss of $0.15 per share.
- The company has secured capacity agreements totaling 600 MW and aims to achieve roughly $1B in annualized net operating income within five years.
- NVIDIA has completely divested its position in APLD, while the company successfully completed a $2.15B senior secured notes offering at 6.75% interest.
Applied Digital approaches its fiscal third-quarter earnings announcement scheduled for April 8 with renewed support from Wall Street analysts. Darren Aftahi of Roth MKM has maintained his Buy recommendation alongside a $58 price objective, designating APLD as his preferred investment opportunity among covered stocks.
Applied Digital Corporation, APLD
Trading at $24.49, the shares remain significantly below Aftahi’s valuation, suggesting potential appreciation exceeding 130% should his investment thesis materialize.
The analyst highlighted Q3 FY26 as a pivotal reporting period. This quarter represents the initial full period where lease-based revenue streams will be comprehensively recorded in financial statements, offering crucial insight into the performance of the company’s data center partnerships.
Consensus estimates point to quarterly revenue approaching $75.47 million, marking approximately 43% growth compared to the corresponding period last year. However, the bottom line is expected to show an adjusted loss per share of $0.15, wider than the $0.08 loss reported in the prior-year quarter.
Aftahi noted that the recent A3 credit upgrade received by CoreWeave may create positive spillover effects for Applied Digital through narrower bond spreads and reduced financing costs for APLD.
Construction has commenced on the DF1 facility in Louisiana, supported by development financing from Macquarie. Aftahi anticipates the announcement of a third hyperscaler lease agreement and recommends investors view any stock price weakness as an attractive entry point.
Applied Digital has executed capacity agreements representing 600 MW in total. The company projects annualized net operating income of approximately $1 billion over a five-year horizon — what Aftahi characterizes as a “scalable platform.”
Capital Raising and Financial Framework
On the financing front, Applied Digital recently completed a $2.15 billion issuance of senior secured notes via its APLD ComputeCo 2 LLC subsidiary. The notes feature a 6.75% coupon rate, come due in 2031, and were issued at 98 cents per dollar of face value.
The capital raised will fund construction of a 200-megawatt critical IT load facility at the Polaris Forge 2 AI data center campus located in North Dakota, in addition to establishing debt service reserves and covering transaction expenses.
In a related development, Babcock & Wilcox secured a $2.4 billion agreement with Base Electron to deliver 1.2 gigawatts of new generation capacity — encompassing four 300-megawatt natural gas-fired boiler systems — designed to power Applied Digital’s AI Factory facilities.
NVIDIA Stake Exit and Wall Street Outlook
A notable development emerged when NVIDIA completely liquidated its investment in Applied Digital, according to its latest 13F regulatory filing. This divestiture occurred following Applied Digital’s debt offering announcement, which initially pressured share prices.
Nevertheless, the wider analyst community maintains a positive stance. All 10 Wall Street analysts following APLD hold Buy ratings, with a consensus price target of $52.22 — suggesting approximately 113% upside potential from present trading levels.
The stock has declined 4.76% during the past week, though it has delivered roughly 292% returns over the trailing twelve-month period.
Market participants will closely monitor the April 8 earnings conference call for updates regarding new lease agreements, hyperscaler commitments, and management’s perspective on capital allocation strategies.
