Shares of Applied Digital (APLD) are surging in today’s trading after the AI data center company reported stronger-than-expected Q1 results. As a result, analysts were impressed, as Citizens, led by four-star-rated Gregory Miller, maintained its Buy rating and raised its price target from $35 to $40. However, it emphasized that the company’s valuation is now primarily based on its data center leasing activity with AI-focused clients, including the 400 megawatts (MW) already signed with CoreWeave (CRWV), as well as the potential for another gigawatt (GW) of contracts.
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Separately, five-star Needham analyst John Todaro also increased his price target from $21 to $41 and kept his Buy rating. The firm is now focused on the Polaris Forge 2 (PF-2) site, where it expects to secure a lease deal with a major hyperscaler soon. Meanwhile, Applied Digital has already signed another 150 MW lease with CoreWeave at Polaris Forge 1 (PF-1). Therefore, the analysts believe that both PF-1 and PF-2 could each scale to one GW over the next few years, with a total long-term capacity of up to four GW.
Moreover, Craig-Hallum, led by five-star analyst George Sutton, raised its price target to $37 and maintained a Buy rating. Interestingly, just months ago, investors were concerned about Applied’s spending at Ellendale and the delay in securing leases. However, that has now changed, as development for CoreWeave is in full swing, and early construction has started at the Harwood site with financing from Macquarie (MCQEF). Applied is also in early talks with two new hyperscalers at new locations. As a result, analysts believe that the company is entering a growth cycle where revenue from current projects helps fund new ones.
Is APLD Stock a Good Buy?
Using TipRanks’ technical analysis tool, the indicators seem to point to a positive outlook for APLD stock. Indeed, the summary section pictured below shows that 14 indicators are Bullish, compared to two Neutral and six Bearish indicators.
