Applied Digital wins price target raise at Roth

Roth Capital Markets analyst Darren Aftah raised his 12-month price target for Applied Digital (Applied Digital Corporation Stock Quote, Chart, News, Analysts, Financials NASDAQ:APLD) on July 31 to $24 from $17.50, maintaining a “buy” rating after the company announced CoreWeave has executed its full 400-megawatt lease at the Ellendale facility, an agreement valued at approximately $11-billion over 15.5 years.

Applied Digital expects project financing for Ellendale within four to 10 weeks and plans to break ground on one or two new campuses by year-end 2025 on the MISO grid, which spans much of the central U.S. and Manitoba and manages regional power infrastructure. These new sites would be available by the end of 2026. Aftah said early discussions with hyperscalers are already advancing, and he sees strong economics at Ellendale as the foundation for further high-performance computing growth.

The company designs, builds, and operates digital infrastructure across North America, using its low-cost power agreements and existing footprint to support high-performance computing, AI cloud, cryptocurrency mining, and other data centre services. The company generates revenue by hosting clients from various industries under a colocation model.

Aftah said Applied Digital’s fiscal fourth-quarter results were mixed, with revenue coming in about 3% higher but offset by increased costs tied to due diligence work on high-performance computing data centers for current and prospective customers.

He pointed to two key developments: CoreWeave has exercised its option for the remaining 150 megawatts at the Ellendale site, bringing its total lease to 400MW. CoreWeave will now be the sole tenant at the campus under terms of roughly $1.75-million per megawatt and margins of over 75% Adjusted EBITDA, giving the contract an estimated value of $11-billion over 15.5 years. More importantly, Aftah noted Applied Digital expects to break ground on one or two new campuses by the end of 2025, both on the MISO power grid, with the potential for HPC capacity to come online by the end of 2026. He said negotiations with hyperscalers are already underway.

“(The company) said it has already broken ground on an additional site,” he said. “We note APLD has already passed rigorous technical due diligence with at least two hyperscalers, which we believe leaves it much more prepared than before, and its peers, to potentially sign a hyperscaler tenant. Beyond that, we believe the next major catalyst in four to 10 weeks (per management on the EPS CC) is project financing for Ellendale (100MW site with expansion), which should help with the forthcoming buildout of the other two buildings at the campus.”

Aftah said Applied Digital should generate $46.3-million in Adjusted EBITDA on $305.0-million in revenue in fiscal 2026, down from his previous estimate of $53.4-million in EBITDA but significantly higher than the prior $202.1-million revenue forecast. He expects those numbers to improve in fiscal 2027 to $211.6-million in Adjusted EBITDA on $477.9-million in revenue.

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