APLD Stock Soars 272% in a Year: Will the Momentum Continue?

Core Insights - Applied Digital (APLD) shares have increased by 272% over the past 12 months, significantly outperforming the Zacks Finance sector's growth of 11.8% [1][10] - APLD has outperformed competitors such as Riot Platforms (RIOT), which saw a 39.1% increase, and Equinix (EQIX), which experienced a 23.2% decline [1][10] - The company's quarterly results are expected to be volatile due to ongoing large AI campus developments and financing activities, which may impact stock performance in the near term [1] Transition and Growth Catalysts - APLD is shifting from low-margin tenant fit-outs to long-duration leases, with key milestones including lease commencements at Forge 1 in late 2025 and full occupancy of additional buildings by mid-2026 and 2027 [2] - New or expanded agreements with hyperscalers, such as the investment-grade lease at Polaris Forge 2, are anticipated to provide additional revenue visibility [2] Financial Performance and Estimates - The Zacks Consensus Estimate for APLD's second-quarter fiscal 2026 loss is projected at 10 cents per share, an improvement from a loss of 66 cents per share in the same quarter last year [4] - For fiscal 2026, the consensus loss estimate is 31 cents per share, which is narrower than the 80 cents loss reported in fiscal 2025 [4] Valuation Metrics - APLD is trading at a forward 12-month sales multiple of 21.4X, compared to 9.07X for the broader sector and 5.3X for the S&P 500, indicating a premium valuation that assumes successful buildouts and leasing [5] - The company also trades at a premium relative to peers, with RIOT and EQIX trading at 7.63X and 7.27X, respectively [5] Risks and Challenges - APLD's near-term revenues are heavily reliant on low-margin fit-out work, with significant cash outflows; the company reported approximately $114 million in cash and $687 million in total debt [6] - Customer concentration is a concern, as CoreWeave is the sole tenant for the fully leased 400 MW at Polaris Forge 1, which poses risks related to delays or financing gaps [7] - APLD faces competition from Riot Platforms and Equinix, with the latter offering a diversified approach to infrastructure demand and Riot expanding into high-performance computing [8]