Key Takeaways
- Darren Aftahi of Roth MKM maintains his Buy recommendation on Applied Digital with a $58 price objective, identifying it as his “top pick.”
- The upcoming Q3 FY26 results on April 8 represent the initial complete reporting period featuring full lease revenue recognition.
- Analysts project Q3 revenue around $75.47M, representing approximately 43% year-over-year growth, alongside an anticipated adjusted loss of $0.15 per share.
- The company has secured contracts representing 600 MW of data center capacity with plans to achieve roughly $1B in annual NOI within five years.
- NVIDIA has completely divested its position in APLD, while the firm recently completed a $2.15B senior secured notes issuance priced at 6.75%.
Applied Digital prepares to report fiscal third-quarter financial results on April 8 with renewed endorsement from a prominent Wall Street analyst. Darren Aftahi at Roth MKM has maintained his Buy recommendation alongside a $58 price objective, designating APLD as his preferred investment choice among coverage names.
Applied Digital Corporation, APLD
Trading at $24.49, the shares remain significantly below Aftahi’s target — suggesting potential gains exceeding 130% should his investment thesis materialize.
Aftahi highlighted the upcoming Q3 FY26 report as a pivotal milestone. This quarter marks the first time lease revenue will be completely incorporated throughout the entire three-month period, offering crucial insight into how the company’s data center agreements are translating into financial performance.
Consensus estimates point to quarterly revenue near $75.47 million, reflecting approximately 43% growth versus the comparable year-ago period. Regarding profitability, the Street anticipates an adjusted loss per share of $0.15, expanding from the $0.08 loss reported in the prior-year quarter.
Aftahi noted that CoreWeave’s recent upgrade to A3 credit status may indirectly benefit Applied Digital through tighter bond market spreads and improved borrowing conditions for APLD.
Construction has commenced at the DF1 facility in Louisiana, supported by development financing from Macquarie. Aftahi indicated expectations for a third major hyperscaler lease announcement, suggesting that any share price weakness presents an attractive entry point for investors.
Applied Digital has executed capacity agreements encompassing 600 MW total. Management aims to generate approximately $1 billion in annualized net operating income over the next five years — a strategy Aftahi characterized as a “scalable platform.”
Capital Raise and Financial Infrastructure
On the financing front, Applied Digital recently completed a $2.15 billion senior secured notes offering via its APLD ComputeCo 2 LLC subsidiary. The debt instruments bear a 6.75% coupon rate, come due in 2031, and were issued at 98% of par 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, along with 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 additional generation capacity — encompassing four 300-megawatt natural gas-fired boiler systems — designated to energize Applied Digital’s AI Factory campus infrastructure.
NVIDIA Divestiture and Wall Street Consensus
A notable development emerged when NVIDIA completely eliminated its ownership stake in Applied Digital, according to its latest 13F regulatory filing. This divestment occurred following Applied Digital’s debt offering announcement, which initially pressured share prices.
Nevertheless, Wall Street sentiment remains overwhelmingly positive. All 10 equity analysts tracking APLD maintain Buy ratings, with a consensus price target of $52.22 — indicating approximately 113% potential appreciation from present trading levels.
The stock has declined 4.76% during the past week but has delivered roughly 292% returns over the trailing twelve months.
Market participants will be closely monitoring the April 8 earnings conference call for developments regarding additional lease agreements, hyperscaler partnership commitments, and management’s perspective on capital allocation strategies.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
