Key Takeaways
- Darren Aftahi of Roth MKM maintains his Buy rating on Applied Digital with a $58 price target, designating it his “top pick.”
- The upcoming Q3 FY26 report on April 8 marks the first complete quarter reflecting full lease revenue recognition.
- Consensus estimates point to Q3 revenue of approximately $75.47M, representing ~43% year-over-year growth, alongside an adjusted loss of $0.15 per share.
- The company has secured contracts representing 600 MW of data center capacity and aims for roughly $1B in annualized NOI within five years.
- NVIDIA has divested its entire position in APLD, while the company completed a $2.15B senior secured notes offering priced at 6.75% interest.
As Applied Digital prepares to release fiscal third-quarter results on April 8, the company has secured renewed confidence from Wall Street. 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 remain significantly below Aftahi’s valuation — representing potential appreciation exceeding 130% should his investment case materialize.
The analyst emphasized the significance of Q3 FY26 as an inflection point. This period represents the initial full quarter incorporating complete lease revenue recognition in financial statements, providing critical insight into how the company’s data center agreements are translating into actual performance.
Consensus projections call for quarterly revenue near $75.47 million, reflecting approximately 43% growth versus the comparable year-ago period. Regarding profitability, the Street anticipates an adjusted per-share loss of $0.15, expanding from the $0.08 loss recorded in the prior-year quarter.
Aftahi noted that CoreWeave’s recent A3 credit rating enhancement could provide indirect advantages for Applied Digital — potentially resulting in compressed bond yields and reduced financing costs for APLD moving forward.
Construction has commenced at the DF1 facility located in Louisiana, with development capital from Macquarie now deployed. Aftahi indicated expectations for a third hyperscaler lease announcement to materialize, suggesting investors should view any share price weakness as an accumulation opportunity.
Applied Digital has executed capacity agreements totaling 600 MW. Management targets approximately $1 billion in annualized net operating income across a five-year horizon — what Aftahi characterized as a “scalable platform.”
Capital Raise and Financing Strategy
On the financing front, Applied Digital recently completed a $2.15 billion issuance of senior secured notes via its subsidiary APLD ComputeCo 2 LLC. The bonds bear a 6.75% coupon rate, come due in 2031, and were issued at 98 cents per dollar of face value.
The capital raised will fund construction of a 200-megawatt critical IT load facility at the Polaris Forge 2 AI data center campus situated in North Dakota, along with debt service reserve requirements and associated transaction expenses.
In related developments, Babcock & Wilcox secured a $2.4 billion agreement with Base Electron to deliver 1.2 gigawatts of new generation capacity — encompassing four 300-megawatt natural gas-fired boiler installations — designated to energize Applied Digital’s AI Factory facilities.
NVIDIA Divestiture and Wall Street Consensus
A notable development emerged recently: NVIDIA has completely liquidated its ownership position in Applied Digital, as revealed in its latest 13F regulatory filing. This transaction occurred following Applied Digital’s debt issuance announcement, which initially pressured share performance.
Nevertheless, the overall analyst community maintains an optimistic stance. All 10 Wall Street analysts providing coverage on APLD hold Buy ratings, with a consensus price objective of $52.22 — suggesting approximately 113% appreciation potential from present 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 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 strategy.
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