Positive - Applied Digital stock has surged 48% in 6 months, showing strong growth prospects

From Nasdaq: 2024-12-20 11:43:00

Applied Digital Corporation (APLD) shares have surged 47.9% in the last six months, outperforming the Finance sector and Financial Miscellaneous Services industry. Revenues in Q1 FY2025 grew by 67% to $60.7 million, driven by Cloud Services contracts. APLD added two clusters to its Cloud Services Business, with plans to expand further. Data centers’ electricity consumption is expected to rise significantly, benefiting APLD’s access to affordable energy.

APLD is finalizing a lease agreement for a 100 MW facility for HPC applications, with plans for more buildings to increase total capacity to 400 MW. The company’s data centers in North Dakota are operating at full capacity, and it aims to deploy additional clusters in the second half of FY2025. Partnerships with NVIDIA, Super Micro Computer, Hewlett Packard, and Dell Technologies enhance APLD’s offerings.

Improving liquidity and balance sheet strength are positive factors for APLD, with recent debt financing and cash reserves increasing. Revenue estimates for FY2025 show significant growth, with a narrower loss per share expected compared to the previous year. The company’s focus on expanding data center capacity and strategic partnerships bode well for future growth prospects.

While APLD’s stock has shown strong growth, its valuation may be a concern for investors. The forward P/S ratio is higher than industry peers, indicating a premium valuation. Investors are advised to consider the company’s growth potential alongside valuation concerns. A Zacks Rank #3 (Hold) suggests waiting for a better entry point to accumulate the stock for long-term prospects.



Read more at Nasdaq: Applied Digital Stock Rises 48% in 6 Months: Buy, Sell or Hold?