APLD Rises 58% in 6 Months: Three Key Reasons to Hold the Stock Now

Applied Digital APLD designs, builds and operates high-performance data centers for AI, cloud and blockchain workloads. The company has increasingly positioned itself as a hyperscale AI infrastructure provider, anchoring its growth strategy around long-term lease agreements with investment-grade tenants.

Shares of APLD have appreciated 58% over the past six months, significantly outpacing the Zacks Finance Miscellaneous Services industry's decline of 29.7% and the broader Finance sector's drop of 1.6%. The stock has also outperformed key peers during the same period, with Equinix EQIX shares advancing 18.4% while Riot Platforms RIOT shares declining 6.2%. The outperformance is driven by APLD’s expanding hyperscaler partnerships, including its large-scale AI infrastructure deployments for CoreWeave CRWV, along with the successful energization of its first 100-megawatt facility.

APLD’s 6-Month Performance

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APLD’s AI Infrastructure Pipeline Drives Revenue Growth

APLD’s existing AI infrastructure is beginning to translate into revenue growth. The company has energized the first 100-megawatt building at its Polaris Forge 1 campus, marking the start of lease revenues tied to its long-term agreement with CoreWeave. This milestone represents the first phase of a larger 400-megawatt AI factory deployment for CoreWeave, positioning APLD to generate increasing lease revenues as additional buildings at the campus become operational. As capacity tied to CoreWeave ramps over the next several years, the project is expected to provide growing recurring revenue visibility for APLD’s infrastructure platform.

Beyond Polaris Forge 1, APLD continues to expand its AI infrastructure footprint through Polaris Forge 2 and additional development opportunities. The company signed an approximately 15-year lease with a U.S.-based investment-grade hyperscaler for 200 megawatts of AI and high-performance computing capacity at Polaris Forge 2, with phased delivery beginning in 2026. Combined with the continued buildout supporting CoreWeave at Polaris Forge 1, these projects significantly expand APLD’s contracted pipeline. The company is in advanced discussions with a third investment-grade hyperscaler across three additional sites representing 900 megawatts of potential capacity. Each of APLD's campuses carries expansion potential of up to 2 gigawatts, and the company has outlined a credible path toward 5 gigawatts of total capacity by the early 2030s.

The Zacks Consensus Estimate for APLD’s fiscal 2026 revenues is pegged at $340.24 million, up 57.88% year over year. The consensus mark for fiscal 2026 loss is pegged at 26 cents per share, improving by 10 cents over the past 30 days and reflecting an improvement from the loss of 80 cents reported a year ago.

Applied Digital Corporation Price and Consensus

Applied Digital Corporation price-consensus-chart | Applied Digital Corporation Quote

APLD's Energy Strategy Builds a Competitive Moat

Energy availability and cost efficiency are the defining constraints in large-scale AI infrastructure development, and APLD has structured its strategy around both. The company's focus on North Dakota is deliberate, offering abundant low-cost power, a naturally cool climate and a supportive regulatory environment that together deliver attractive unit economics for hyperscalers committing to 15-year lease agreements. These structural advantages provide APLD with a cost-of-operations edge that competitors in higher-cost or more congested power markets are unlikely to replicate quickly.

APLD is reinforcing its energy ecosystem through partnerships and investments that extend its first-mover advantage. Working with Babcock and Wilcox Enterprises to deploy modular power generation, APLD can bring new capacity online 3-4 years ahead of conventional procurement timelines, a critical edge as power delivery constraints slow expansion for most operators. APLD's investment in Corintis, a developer of advanced direct-to-chip liquid cooling technology, further positions the company to meet the rising energy and compute demands of next-generation AI workloads ahead of peers.

APLD Faces Premium Valuation

APLD shares are overvalued as suggested by the Value Score of F. The stock is trading at a forward price-to-sales (P/S) multiple of 15.74x, substantially above the sector average of 8.94x and the industry average of 2.68x. APLD shares are trading at a premium compared to peers Equinix and Riot Platforms. Equinix and Riot Platforms shares are trading at forward P/S multiples of 9x and 8.69x, respectively.

The premium is difficult to justify given the extended revenue conversion timeline and ongoing GAAP net losses as the company remains in a capital-intensive development phase. The 900 megawatts of capacity currently in advanced pipeline discussions remains uncontracted, representing opportunity rather than certainty. Any slowdown in converting its pipeline into contracted revenue could pressure the stock from current levels.

APLD Stock Trades at a Premium

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Conclusion

APLD is at a pivotal stage, having transitioned from a construction phase company to one actively generating lease revenues from its first operational hyperscaler facility. The expanding contracted pipeline and first mover energy advantages position APLD as a credible long-term AI infrastructure platform. However, the stock's robust performance over the past six months has priced in a significant portion of this potential, and the premium valuation relative to peers leaves limited upside room given the ongoing GAAP losses and uncontracted capacity still in advanced discussions.

Prudent investors may consider holding positions while waiting for attractive entry points in 2026, particularly if market volatility creates opportunities to acquire shares at favorable valuations. APLD stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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