Can Applied Digital Stock Reach $18? Here’s What This Analyst Expects

Applied Digital (NASDAQ:APLD) shares kicked off the week in spectacular fashion, with shares soaring 48% on Monday after announcing two major lease deals.

The company signed a pair of approximately 15-year agreements with CoreWeave, a cloud infrastructure provider specializing in high-performance computing and AI workloads.

Under the agreements, Applied Digital will provide 250 megawatts (MW) of critical IT capacity at its data center campus in Ellendale, North Dakota, to support CoreWeave’s AI and HPC (high-performance computing) operations. The company expects to earn roughly $7 billion in revenue from these leases over their duration.

Citizens JMP analyst Greg P. Miller thinks it’s no wonder the stock surged to such an extent.

“With 30%+ short interest, a big cash burn before this, and a team that has twice before failed to close a pending deal, we were not surprised to see the stock up 50% on the news,” Miller said. “We expect this momentum to continue.”

Applied Digital began as a cryptocurrency mining hosting provider and continues to support Bitcoin mining operations. However, the company has strategically shifted its focus toward HPC and AI infrastructure. Miller has previously talked of the opportunity available for blockchain-focused companies to pivot toward providing more space and power for data centers, especially given a looming power shortage.

Therefore, Miller sees the deal as a “true watershed event” for the company, even though it wasn’t the industry-defining moment he initially anticipated – namely, a deal with a major hyperscaler. The analyst had expected the agreement to involve a large player like Amazon or Meta but that ultimately wasn’t the case.

“In our view,” Miller went on to add, “that would have opened the door for others and the whole group would be off to the races; however, this deal is very APLD specific.”

There’s not much dilution involved here. The company issued $13 million in warrants, equal to about 5% of shares outstanding, with a strike price of $7.19. There’s potential for another 3% in warrants if the final 150 MW of capacity is contracted, with the strike price to be set later. Assuming the company eventually sells all of its available capacity, the total impact on valuation would be dilution of $0.71 per share.

Despite the huge surge, Miller points out that with the stock still trading at under 10 times its projected EBITDA for fiscal 2028 (which essentially reflects calendar year 2027), its valuation “remains attractive.”

Accordingly, Miller assigns an Outperform (i.e., Buy) rating to APLD shares, while lifting his price target from $12 to $18. The new figure makes room for additional 12-month gains of ~76%. (To watch Miller’s track record, click here)

Overall, APLD stock has a full house of Buys – eight in total – from Wall Street analysts, resulting in a Strong Buy consensus rating. However, the average price target stands at $10.50, suggesting limited upside from current levels. (See APLD stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.