Is Applied Digital (APLD) Undervalued On Its Soluna Data Center Deal?
Applied Digital (APLD) is back in focus after confirming a definitive agreement with Soluna Holdings to co-develop a 50 MW AI and high performance computing data center in Texas, powered partly by nearby wind generation.
The Soluna partnership lands just as Applied Digital’s share price shows a sharp rebound, with a 1-day share price return of 8.54% and a 7-day gain of 3.22%. This follows a tougher stretch that saw the 30-day and year-to-date share price returns fall around 25%. The 3-year total shareholder return remains very large, even though the 1-year total shareholder return declined by 31.48% and the 5-year record is weaker.
Scan 55 AI infrastructure stocks that could benefit from the same AI and high performance computing buildout story now putting Applied Digital and its Soluna venture back on traders' screens.
Applied Digital just jumped on the Soluna news, yet the stock is still down hard over the past month and year. Does that set up an early entry now, or a better shot if the rebound fades first?
Most Popular Narrative: 77% Undervalued
Applied Digital last closed at $20.98, while the most followed narrative anchors on a Fair Value of $93.00. The debate is really about whether the business can grow into that gap using its contracted capacity and financing plan.
The main thing that has to go right is that Applied Digital successfully executes its highly capital intensive build program, energising more than 600 megawatts over the next 12 months while managing a debt load of about $6.4b and securing additional project financing on acceptable terms.
See why 38 investors see Applied Digital as 77% undervalued.
Result: Fair Value of $93.00 (UNDERVALUED)
Still, the bullish Applied Digital story runs into two hard constraints: sizeable GAAP losses today and a planned buildout that leans heavily on about US$6.4b of debt and more project financing.
Find out about the key risks to this Applied Digital narrative.
Another View: Applied Digital On Sales-Based Pricing
The bullish $93.00 fair value on Applied Digital leans heavily on long term growth forecasts. On simpler sales math, the picture is different. APLD trades on a P/S of 7.3x compared with a US IT sector average of 2x and direct peers at 5.3x, while the fair ratio sits at 4.6x. That richer multiple can signal belief in the AI data center story, or it can leave less room for error if growth or margins fall short. Which side of that trade off do you want to be on as the Soluna project ramps?
To see how that pricing gap lines up with the rest of the numbers, See what the numbers say about this price — find out in our valuation breakdown..
Next Steps
Mixed signals on Applied Digital so far. If you want to move before sentiment shifts again, weigh the bullish capacity story against the debt, and then work through the 1 key reward and 2 important warning signs.
Looking for more investment ideas beyond Applied Digital?
If Applied Digital has your attention, keep that momentum going by lining up a few fresh ideas so you are not relying on a single AI data center story.
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