Key Takeaways
- Needham cut its Applied Digital price target to $70 from $83 on Oct. 8 but kept its Buy rating. The new target is 194% above the Oct. 7 close.
- The stock has fallen 52% from its May 28 closing high, hit by a sector selloff, $6.4 billion of debt and tougher local rules on data center construction.
- Needham’s target implies 19.4x forward sales, far above the stock’s 3-year average of 10.5x.
- The call looks plausible but stretched, and the next thing to watch is the expansion leases management expects to sign by the end of 2026.
Applied Digital (APLD) has lost 52% since its May 28 closing high. On Oct. 8, Needham’s John Todaro cut his price target to $70 from $83 and kept his Buy rating. That target is still 194% above the Oct. 7 close of $23.81.
What sank the stock
On Aug. 28, an impairment charge at IREN (IREN) dragged down AI data center stocks, Applied Digital included.
Then there’s the debt, which TIKR looked at in September: $6.4 billion by Aug. 31. Fiscal first-quarter interest expense hit $77.4 million, up from $8.0 million a year earlier.
And building is getting harder. On the Oct. 7 earnings call, CEO Wes Cummins said: “We are seeing more local moratoriums, tighter zoning requirements, longer permitting time lines and greater community resistance in certain markets.”
Needham trims, but stays bullish
The quarter beat by a mile: $341.9 million of revenue against a $124.6 million consensus. Needham says the beat came almost entirely from one-time fit-out work: of $262.6 million in HPC hosting revenue, $183.5 million was tenant fit-out.
Needham also lowered its target multiple, citing regulatory and financing risk.
Does $70 add up?
At the end of May, the stock closed at $47.28 against an average target of $65. On Oct. 7 it closed at [$23.81], and the average target was still $65.
Thirteen of the 15 analysts rate it Buy or Outperform, though two now rate it Hold, where none did in May.
Analysts expect revenue to climb from $611 million in fiscal 2026 to $1.92 billion in fiscal 2028 (years to May).
The fiscal first quarter alone brought in $341.9 million, against a fiscal 2027 estimate of $755 million from a single analyst, so expect that number to rise.
Applied Digital now trades at [6.6x] forward sales, well below its 3-year average of 10.5x.
Needham’s $70 works out to 19.4x forward sales. The stock’s 3-year high was 33.0x, in October 2025.
Plausible, but stretched
The risk is the balance sheet: Polaris Forge 3, Delta Forge 1 and Delta Forge 2 still need financing.
The stock is cheap against its own history, and revenue estimates point up. But $70 asks for a multiple far above its average just as financing and permits get harder. A move back toward 10.5x is the more believable rebound.
The next test is the roughly 250 megawatts of expansion leases Cummins expects to sign by the end of calendar 2026 “at materially higher pricing compared to prior leases.” If those land and the next campuses get financed cheaply, $70 starts to look a lot more reasonable.
So what is Applied Digital stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
