Digital infrastructure firm Applied Digital (APLD) recently changed its lease agreements with AI cloud provider CoreWeave (CRWV) for its North Dakota data centers, and analysts believe that this could improve Applied Digital’s financing costs. According to five-star Needham analyst John Todaro, the key change is that lenders are now indirectly backed by stronger, investment-grade credit instead of CoreWeave’s lower-rated parent company.
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New trading tool for APLD bulls/bearsAs a result, this shift could make it cheaper for Applied Digital to borrow money for its projects over time. In addition, this type of setup could benefit other companies in the same industry. Needham noted that Core Scientific (CORZ) may be in a similar position, especially at its Dalton facility. In that case, some of the computing demand tied to CoreWeave leases may actually come from large, high-quality customers like Meta Platforms (META).
Because of this, the real credit risk may be lower than it first appears, which could open the door to better financing terms. Interestingly, Needham currently has a Buy rating on Applied Digital, with a price target of $41 per share, but has a Hold rating on CoreWeave with no price target. At the same time, the firm is bullish on Core Scientific and has assigned a $23 per-share price target.
Is APLD Stock a Good Buy?
Overall, analysts have a Strong Buy consensus rating on APLD stock based on eight Buys assigned in the past three months, as indicated by the graphic below. Furthermore, the average APLD price target of $46 per share implies 53.4% upside potential.
