Where Will Applied Digital (APLD) Stock Be in 1 Year?

Core Insights - Applied Digital's revenue increased significantly from $8.5 million in fiscal 2022 to $144.2 million in fiscal 2025, excluding its cloud business [1] - The company is spinning out its cloud business, Sai, to merge with EKSO Bionics Holdings, forming a new entity called ChronoScale, while retaining a 97% ownership [2] - Despite rapid growth, Sai was unprofitable and conflicted with Applied Digital's strategy to evolve into a stable REIT [3] Business Model - Applied Digital operates data centers, leasing them to companies that install their own servers, initially focusing on Bitcoin miners before pivoting to cloud, HPC, and AI markets in 2022 [5] - The company launched a subsidiary, Sai Computing, in 2023 to offer cloud-based AI services using Nvidia's latest GPUs [4] Financial Performance - The stock price surged over 270% in the past year, driven by growth, new lease agreements, and the planned transformation into a REIT [7] - However, net losses widened from $23.5 million in fiscal 2022 to $233.7 million in fiscal 2025 due to expansion and increased GPU purchases [8] Expansion Plans - Applied Digital is expanding its Polaris Forge 1 campus, with a new 100 MW AI/HPC data center completed and plans for additional 150 MW buildings [9] - The company has contracted approximately $16 billion in lease payments over the next 15 years, primarily from CoreWeave, indicating strong demand for its data centers [10] Market Outlook - Analysts expect revenue for fiscal 2026 to rise by 38% to $297.3 million, with a narrowed net loss of $91.1 million, although current estimates may be unreliable due to the inclusion of the cloud business [11] - The potential for over $1 billion in annual revenues exists after campus expansions, but profitability may take two to three years [12] Valuation Considerations - Applied Digital's stock may experience moderate growth in the next year, but it is not yet a stable income-generating REIT like Digital Realty and Equinix [14] - Analysts may lower near-term estimates following the spin-off of ChronoScale, suggesting a cautious approach to investment [15]