Applied Digital
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| $37.89 | ~$40 | $20 – $65 |
| May 2026 | Bull 25% / Base 50% / Bear 25% | Speculative; hyperscaler lease story |
Verdict: APLD reported fiscal Q3 2026 revenue of $126.6M (+139% YoY) with Adj net income of $33.2M and Adj EBITDA of $44.1M[1]. The headline driver is the $7.5B 15-year lease with an investment-grade hyperscaler at the Delta Forge 1 AI campus. To fund expansion, APLD announced a $2.15B senior secured notes offering. Stock dropped 25% from $48 high on valuation/execution concerns[2]. At ~526x forward P/E[3], multiple is detached from current profitability. The bull case is sustained hyperscaler lease pipeline; bear case is execution risk on the massive build-out plus debt service burden.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price (approx) | ~$36 | Down 25% from $48 high [2] |
| Q3 FY26 revenue | $126.6M (+139%) | [4] |
| Q3 FY26 Adj EBITDA | $44.1M | Adj NI $33.2M [4] |
| Hyperscaler lease | $7.5B / 15-yr | Delta Forge 1 AI campus [1] |
| Senior secured notes | $2.15B offering | Funds Polaris Forge 2 [4] |
| Forward P/E | 526x | vs 5-yr avg 37x [3] |
BULL / BASE / BEAR SCENARIOS
| Scenario (weight) | Assumptions | Fair Value |
|---|---|---|
| Bull (25%) | Multi-billion lease pipeline expands, Polaris Forge 2 fully leased, multiple stays speculative | $65 |
| Base (50%) | Delta Forge 1 lease delivers, Polaris Forge 2 partial lease, multiple compresses to 60x | $40 |
| Bear (25%) | Execution delays, lease pipeline stalls, debt service compresses returns | $20 |
| Probability-weighted | Capital-intensive HPC datacenter developer; execution + debt risks are material. | ~$40 |
Key Risks
- Construction execution: Multi-billion build-outs require flawless execution; delays = revenue miss.
- Debt service: $2.15B+ secured notes increase financial leverage; coverage ratio matters.
- Customer concentration: Delta Forge 1 has single hyperscaler tenant; loss = catastrophic.
- Power supply: Grid interconnection delays at North Dakota / data center sites.
What Would Change Our View
- Upside: New hyperscaler lease announcement, Polaris Forge 2 lease, EBITDA inflection.
- Downside: Construction delay, lease cancellation, debt covenant pressure.
Sources
[1] https://www.sec.gov/Archives/edgar/data/0001144879/000149315226008549/ex99-2.htm
[3] https://www.gurufocus.com/term/forward-pe-ratio/APLD
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security. Verify material facts independently and consult qualified advisors before making decisions.