Compass downgrades Applied Digital with valuation ‘getting full here’

Compass Point downgraded Applied Digital (APLD) to Neutral from Buy with a price target of $13, up from $10. Last week, Applied Digital signed CoreWeave (CRWV) to 250MW leases that provide revenues of $7B over the 15-year lease, the analyst tells investors in a research note. The firm believes this to be a strong result for Applied. The deal doesn’t come without risks though, as Applied Digital must begin servicing 100MW data center during the second half of 2025 and 150MW in the first half of 2026 in addition to other ability for CoreWeave to opt-out, contends Compass. The firm also sees risk related to project financing and Macquarie’s involvement on the equity side. Given the stock’s move, Compass thinks Applied Digital’s valuation is “getting full here” and moves to the sidelines pending a better entry point.