Key Takeaways
- B. Riley cut its Applied Digital price target to $51 from $75 on Oct. 30 and kept its Buy rating. The new target is still 185% above the share price.
- Applied Digital has about $36 billion of signed leases with CoreWeave and two hyperscalers, but its interest expense already runs ahead of the rent those leases bring in.
- Analysts keep raising their revenue estimates and cutting their earnings estimates. They now expect a loss in fiscal 2028, where three months ago they expected a small profit.
- The leases can probably support a value near $51. But lenders, preferred holders and new shares get paid first, so the stock will likely trade well short of that until the financing gets cheaper.
Applied Digital (APLD) has lost 65% since its May high. On Oct. 30, B. Riley cut its price target to $51 from $75 and kept its Buy rating. That’s still 185% above the $17.91 share price.
Big revenue, bigger bills
Applied Digital’s Oct. 7 report led with a 322% jump in revenue, to $341.9 million in the fiscal first quarter ended Aug. 31.
But more than half of that was low-margin fit-out work for tenants. And interest expense rose to $77.4 million from $8.0 million a year earlier, more than the $65.8 million of base rent.
Then debt-heavy AI infrastructure stocks slumped on Oct. 14 on bets that U.S. rates would rise. And on Oct. 26, Elon Musk said the sector could face consolidation and failures, hitting Applied Digital and CoreWeave (CRWV), the tenant at its first North Dakota campus.
The leases are real
B. Riley’s Nick Giles points to the backlog: as of Aug. 31, Applied Digital had leases for about 1.41 GW across five campuses, worth about $36 billion over their initial terms.
TIKR tracks 16 analysts on Applied Digital. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Applied Digital, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Applied Digital’s Analyst Ratings
Does $51 add up?
Wall Street’s average target has risen over the past year, to $62 on Oct. 27 from $44:
The 16 analysts’ targets run from $22 to $93, and B. Riley’s new target is 18% below the average.
Analysts keep raising their revenue estimates, too:
They expect $1.95 billion of revenue in fiscal 2028, more than triple fiscal 2026’s $611.3 million. Earnings estimates are going the other way: three months ago, the consensus called for a $0.13 per share profit in fiscal 2028, and now it expects a $0.78 loss.
Financing explains a lot of that. In the August quarter, $113.1 million of interest plus $60.1 million of dividends in kind on Macquarie’s preferred equity came to 2.6x base rent. And weighted diluted shares rose 37% in fiscal 2026.
With losses expected, the test is sales: the stock’s five-year average of 7.7x forward revenue, on the fiscal 2028 estimate, comes to about $50 a share. So B. Riley’s target pays the usual multiple today for revenue Applied Digital won’t book until fiscal 2028.
Shareholders get paid last
CoreWeave brings in about 30% of Applied Digital’s contracted revenue, and it carries about $50 billion of debt of its own.
My take: the leases can probably support a value near $51, but lenders, Macquarie’s 12.75% preferred and any new stock all get paid before common shareholders. Until the financing gets cheaper, I’d expect the shares to trade well short of B. Riley’s target.
The fiscal second-quarter report in January is the one to watch: base rent well above $65.8 million, plus cheaper debt for the next three campuses, would make $51 look a lot more reachable.
So what is Applied Digital stock actually worth?
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