Key Takeaways
- Darren Aftahi from Roth MKM maintains his Buy recommendation on Applied Digital stock with a $58 price objective, dubbing it his “top pick.”
- The upcoming Q3 FY26 results on April 8 mark the initial complete quarter showcasing full lease revenue recognition.
- Analysts project Q3 revenue reaching approximately $75.47M, representing a ~43% year-over-year increase, alongside an anticipated adjusted loss of $0.15 per share.
- The company has secured agreements representing 600 MW of total capacity, with ambitions to achieve roughly $1B in annual NOI within five years.
- NVIDIA recently divested its entire position in Applied Digital, while the firm completed a $2.15B senior secured notes transaction at 6.75% interest.
As Applied Digital approaches its fiscal Q3 earnings report scheduled for April 8, the company continues to receive strong support from Wall Street analysts. Darren Aftahi at Roth MKM has maintained his Buy recommendation alongside a $58 price objective, designating APLD as his preferred selection among covered stocks.
Applied Digital Corporation, APLD
Trading at $24.49, the shares currently represent a significant discount to Aftahi’s valuation — suggesting potential appreciation exceeding 130% should his investment thesis materialize.
Aftahi emphasized that the upcoming Q3 FY26 quarter represents a pivotal moment. This reporting period will showcase the company’s first complete quarter with full lease revenue incorporation, offering crucial insight into how Applied Digital’s data center partnerships are performing financially.
Consensus estimates point to quarterly revenue near $75.47 million, marking approximately 43% growth versus the comparable year-ago period. For profitability metrics, the Street anticipates an adjusted per-share loss of $0.15, representing a deeper deficit compared to the $0.08 loss recorded in last year’s corresponding quarter.
The analyst noted that CoreWeave’s recent credit rating improvement to A3 could provide indirect benefits for Applied Digital — potentially resulting in narrower bond spreads and reduced financing expenses for APLD going forward.
Construction has commenced on the DF1 facility located in Louisiana, supported by development capital from Macquarie. Aftahi anticipates an announcement regarding a third hyperscaler lease agreement, suggesting investors should view any share price weakness as an attractive entry point.
Applied Digital has executed capacity agreements totaling 600 MW. Management is pursuing approximately $1 billion in annual net operating income over the next five years — what the analyst characterized as a “scalable platform.”
Capital Raising and Financial Architecture
On the financing front, Applied Digital completed the pricing of a $2.15 billion senior secured notes issuance via its APLD ComputeCo 2 LLC subsidiary. These instruments feature a 6.75% coupon rate, come due in 2031, and were issued at 98% of par value.
The capital raised will fund the construction of a 200-megawatt critical IT load facility at the Polaris Forge 2 AI data center campus situated in North Dakota, in addition to covering debt service reserves and deal-related expenses.
In a related development, Babcock & Wilcox secured a $2.4 billion agreement with Base Electron to deliver 1.2 gigawatts of new power generation infrastructure — encompassing four 300-megawatt natural gas boiler systems — designated to support Applied Digital’s AI Factory facilities.
NVIDIA Divestiture and Wall Street Outlook
A notable development emerged when NVIDIA disclosed it has completely liquidated its investment in Applied Digital, according to its latest 13F regulatory filing. This disposal occurred following Applied Digital’s debt offering announcement, which initially pressured share performance.
Nonetheless, the overall analyst consensus remains decidedly optimistic. All 10 Wall Street firms tracking APLD maintain Buy ratings, with a collective average price target of $52.22 — indicating approximately 113% potential appreciation from present trading levels.
Shares have declined 4.76% during the past week but have delivered roughly 292% returns over the trailing twelve-month period.
Market participants will closely monitor the April 8 earnings conference call for management commentary on new lease transactions, hyperscaler partnership progress, and the company’s strategic capital allocation plans.
