Applied Digital Gains on Bullish Analyst Call Ahead of Earnings
Freedom Capital Markets initiates coverage with a Buy rating, citing the company's strategic position in the high-demand market for AI data infrastructure.
Shares of Applied Digital (NASDAQ: APLD) rose in morning trading Wednesday after Freedom Capital Markets initiated coverage on the company with a “Buy” rating and a $36 price target, signaling fresh optimism just hours before the company is set to report its fiscal second-quarter earnings.
The bullish call highlights investor focus on Applied Digital's rapid transformation from a cryptocurrency mining operator into a key provider of high-performance computing (HPC) infrastructure, a sector experiencing explosive growth from the demands of artificial intelligence.
The new $36 price target suggests a nearly 19% upside from the stock's current price of around $30.26. While notable, this view is situated within a wider consensus of positive sentiment on Wall Street. The average analyst price target for Applied Digital stands higher at approximately $43.70, reflecting a broad belief in the company's growth trajectory.
At the heart of the bullish thesis is Applied Digital's strategic pivot to servicing the AI industry. The company, which officially changed its name from Applied Blockchain in late 2022, is now focused on designing, building, and operating next-generation data centers tailored for the intense computational needs of AI and machine learning workloads.
A cornerstone of this strategy is a massive, long-term partnership with AI cloud provider CoreWeave. Through a series of agreements, Applied Digital is contracted to provide 400 megawatts of data center capacity for CoreWeave at its campus in Ellendale, North Dakota. According to company announcements, these leases are projected to generate approximately $11 billion in revenue over their lifespan, providing a stable, long-term income stream that has captured the attention of analysts.
Investors and analysts will be keenly watching the company's fiscal second-quarter 2026 results, scheduled for release after the market closes today. Wall Street is anticipating revenue of about $82.2 million and a loss per share in the range of -$0.10 to -$0.17. However, the headline numbers may be secondary to management’s update on the construction and operational timeline for its new HPC data centers.
Analysts at TipRanks note that the first 100 MW data center for the CoreWeave partnership is slated to become operational in the fourth quarter of calendar 2025, with the remaining capacity coming online through 2026 and 2027. Any acceleration of this timeline or new customer agreements could provide a significant catalyst for the stock, while any delays could test investor patience.
Applied Digital's stock has been a high-flier, with a 52-week range stretching from just $3.31 to a high of $40.20, reflecting both the immense opportunity and the inherent volatility in the burgeoning AI infrastructure market. With a market capitalization of approximately $8.45 billion, the company is positioning itself as a crucial supplier in the digital backbone of the AI economy, a narrative that today’s analyst initiation and the upcoming earnings report will put to the test.