Looking for a bargain-basement stock with potentially high rewards? Of course, you are! Analysts are currently buzzing about Applied Digital (APLD) as a high-risk yet high-reward investment. The company has secured $125 million in capital and is in a prime position to expand its data center capabilities and compete strongly in the booming high-performance computing (HPC) industry. The HPC industry is expected to grow from $50 billion in 2023 to $92 billion by 2030 (9.1% CAGR).
Applied Digital shares have surged 146% in recent months amid rumors of the company being a top candidate for a buyout, with thoughts that this could add to its fortunes.
Who Is Applied Digital?
Applied Digital Corporation provides data center solutions for artificial intelligence (AI) and other high-performance computing (HPC) industries. The company offers data center colocation services, AI GPU cloud services, and blockchain colocation services. Applied Digital is committed to sustainability. Its HPC data center infrastructure is designed to use renewable energy, leading to further renewable energy buildout by providing a higher ROI for sustainable projects.
The company’s Q3 FY 2024 revenue of $43.35 million indicated 208% YoH growth but was below analyst expectations. It had a net loss of $62.8 million, which was significantly higher than in Q3 2023, and an EPS of -$0.24, missing the -$0.10 consensus. Its Q4 guidance anticipates $41.7 to $43.7 million in revenue and adjusted EBITDA of $2.8 million to $4.8 million.
What The Analysts Are Saying
This highly volatile stock has taken an upward ride in the past 90 days. APLD has been trading above 20-day and 50-day moving averages. The stock’s P/S ratio is 4.59x, which is higher than the industry average. Even so, analyst sentiment is a Strong Buy consensus, with an average price target of $9.50, indicating almost 45% upside potential. Due to its high volatility, recent financial underperformance, and expensive valuation compared to the industry average, APLD is seen as a potentially lucrative but risky investment.
Neither Julie Stoller nor Stocks.News have positions in this company.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...