Should You Chase the Rally in Applied Digital Stock Today?

Core Viewpoint - Applied Digital (APLD) has experienced significant growth, with revenue more than tripling to approximately $127 million in the second quarter, bolstered by a $5 billion hyperscaler lease [1] Group 1: Financial Performance - APLD's revenue for the second quarter reached about $127 million, representing a more than threefold increase [1] - The company achieved a key profitability milestone, breaking even on an adjusted basis in the fiscal second quarter, which alleviates previous concerns regarding its stock [5] - Applied Digital's net operating income (NOI) is projected to exceed $1.0 billion by the end of the decade, indicating strong future revenue visibility [4] Group 2: Market Position and Growth Potential - The company has only onboarded two U.S. hyperscalers, suggesting substantial room for expansion in the AI infrastructure market [3] - Existing lease agreements with these two clients are valued at approximately $16 billion, providing significant revenue visibility [4] - APLD shares are currently trading at a price-to-sales (P/S) multiple of about 58x, which is considered reasonable given the company's strong positioning in the AI sector [6] Group 3: Analyst Sentiment and Stock Performance - Wall Street analysts maintain a bullish outlook on APLD, with a consensus rating of "Strong Buy" and a mean target price of about $42, indicating a potential upside of around 30% [8] - Historically, APLD shares have shown an average rally of over 26% in February over the past four years, suggesting a favorable seasonal trend [6]