APLD Stock Forecast & Price Target

Applied Digital Corp is poised for significant revenue growth, with a forecasted 39% increase in High-Performance Computing (HPC) revenues for FY28, reaching approximately $763 million, compared to previous estimates of $547 million. The company's proactive facility expansion is bolstered by improving labor conditions and reduced supply constraints, further enhancing its revenue-generating capacity. Additionally, Applied Digital's strategic focus on its HPC build-out, alongside a promising pipeline including a notable collaboration with CoreWeave, positions it favorably within an attractive market valuation.

Applied Digital Corp's gross margins fell significantly short of estimates, coming in at 13% compared to the projected 19%, largely attributed to high fit-out costs. The company faces substantial risks, including macroeconomic headwinds, supply chain delays, and upcoming challenges associated with the Q2 2024 bitcoin halving that may negatively impact its mining customers and contracts. Additionally, the reliance on a limited customer base raises concerns over revenue concentration, while competition from independent miners and changing power prices pose further threats to Applied Digital's financial stability and profitability.