APLD Stock Forecast & Price Target

Applied Digital Corporation has demonstrated strong revenue growth, with a notable increase of 39% in High-Performance Computing (HPC) revenues, rising to $763 million compared to a previous estimate of $547 million. The company reported total revenue of $64.2 million for the first quarter of FY26, significantly up from $34.8 million in the previous quarter, indicating robust operational momentum. Furthermore, the potential for substantial revenue growth is highlighted by projections suggesting that full utilization of its facilities could generate annual revenues approaching $250 billion between 2028 and 2030, reflective of a strong development pipeline and expansion capabilities in the digital infrastructure sector.

Applied Digital Corp is facing significant financial challenges, as evidenced by its gross margins falling to 13%, significantly below the estimated 19%, primarily due to inflated fit-out costs. Additionally, macroeconomic factors, such as potential recessions and escalating geopolitical risks, combined with supply chain issues affecting critical components and delays in GPU deliveries, further contribute to the company's precarious standing. Lastly, anticipated negative margins for its Bitcoin mining customers arising from the upcoming Q2 2024 halving, coupled with increased competition from proprietary miners, pose serious risks to both revenue stability and future contracts, particularly in their HPC business segment.