APLD Stock Forecast & Price Target

Applied Digital Corp has demonstrated significant revenue growth, with a 39% increase in High-Performance Computing (HPC) revenues, reaching approximately $763 million, compared to previous estimates of $547 million. The company is on track for substantial future revenue potential, with projections suggesting that its operations could yield figures around $250 billion annually by 2028–2030, driven largely by full utilization of its facilities. Additionally, the improved labor conditions and reduced supply constraints position Applied Digital to expand its operations effectively, supporting a robust outlook for its HPC and data center hosting segments.

Applied Digital Corp's gross margins fell short of expectations at 13%, significantly lower than the anticipated 19%, primarily due to elevated fit-out costs associated with its Data Center Hosting Business. The company faces several risks, including macroeconomic challenges, supply chain delays affecting critical components, and increasing competition from proprietary miners offering lower hosting rates, all of which could negatively impact profitability and contract viability, particularly post-bitcoin halving in Q2 2024. Additionally, operational setbacks at its HPC site raise concerns about its relationship with key clients like CoreWeave, further complicating the company's revenue outlook.