Applied Digital earns target raise at Roth

Roth Capital Markets analyst Darren Aftahi raised his price target for Applied Digital (Applied Digital Stock Quote, Chart, News, Analysts, Financials NASDAQ:APLD) to US$43 from US$24 in a Sept. 30 earnings preview, maintaining a “Buy” rating as he looks to the timing of a potential lease for the company’s 280-megawatt Harwood, North Dakota site.

The Dallas-based company designs, builds, and operates digital infrastructure across North America, leveraging low-cost power agreements to support high-performance computing, AI cloud, cryptocurrency mining, and other data centre services.

Aftahi said his focus is on the likelihood that Applied secures another high-performance computing colocation agreement by the end of 2025 or early 2026.

“We believe APLD possibly could see another HPC colocation agreement by the end of the year (or into early 2026) for its 280MW Harwood, ND site, considering it began marketing the site to potential tenants that were also in the running for its Ellendale, ND site,” he said. “Because of that, and the fact that APLD had conducted technical due diligence with multiple hyperscaler(s) in the past, we believe an agreement for the site could move more expeditiously.”

He added that a hyperscaler client would diversify Applied’s tenant base beyond NeoCloud, boosting financing options and credit quality, while also improving investor sentiment. He said early lessons at Ellendale should shorten build times at Harwood, noting that the company has already improved labour efficiency, streamlined construction, and gained visibility into long-lead items.

“Were an announcement to happen by year-end for Harwood, we believe APLD could move aggressively onto a third site in its pipeline,” he said.

For its fiscal first quarter of 2026 (ended August), Aftahi is forecasting revenue of about US$58.2-million and Adjusted EBITDA of US$5.6-million, ahead of consensus at US$47.6-million and US$2.1-million, respectively. He cautioned that the delta is largely attributable to the lumpiness of one-time technical fit-out revenue, which is low-margin and potentially non-recurring. Bitcoin hosting revenue is expected at US$38.2-million, flat quarter-over-quarter, with consolidated gross margins of about 13.5%.

“APLD’s growing pains from the past can now act as an advantage,” he said, pointing to its experience in North Dakota as a driver of faster execution. He also flagged potential updates on project financing and the sale process of its AI Cloud business, though he said visibility remains limited.

Updating his sum-of-the-parts analysis, Aftahi valued Applied’s signed HPC contracts (400MW of CITL) at net present value, added incremental announced power at its North Dakota and South Dakota sites, and included the AI Cloud business held for sale along with its 286MW Bitcoin hosting footprint. He then applied a higher discount rate to reflect execution and financing risks, deriving an adjusted market capitalization of about US$11.3-billion, or US$43 per share.

He forecasts Adjusted EBITDA of US$46.3-million on revenue of US$305-million in fiscal 2025, rising to US$211.6-million on US$477.9-million in 2027.

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