Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 26 Jan, 26 | APLD | Buy | USD 37.69 | USD 40.0 | USD 44.0 | Same day | Closed |
11.30%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Applied Digital Corporation designs, develops, and operates digital infrastructure solutions to high-performance computing (HPC) and artificial intelligence industries in North America. It operates through: Data Center Hosting Business, and HPC Hosting Business. The company offers infrastructure services to crypto mining customers; and GPU computing solutions for critical workloads related to AI, machine learning, and other HPC tasks. It also engages in the designing, constructing, and managing of data centers to support HPC applications. The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022. Applied Digital Corporation has an lease agreement with CoreWeave for an additional 150MW at its Polaris Forge 1 Campus in Ellendale, North Dakota. Applied Digital Corporation is based in Dallas, Texas.
Strong EBITDA Expansion and Operating Leverage: For Q2 FY26, Adjusted EBITDA increased to USD 20.2 million, compared with USD 6.1 million in Q2 FY25
Revenue Scale-Up and Business Inflection: During Q2 FY26, Applied Digital generated USD 126.6 million in revenue, compared with USD 36.2 million in Q2 FY25
Material Rise in Operating Overheads: Selling, general and administrative expenses rose to USD 57.0 million in Q2 FY26, compared with USD 26.0 million in Q2 FY25
Sharp Escalation in Cost of Revenues: In Q2 FY26, cost of revenues surged to USD 100.6 million, up from USD 22.7 million in Q2 FY25
Applied Digital’s investment profile is highly sensitive to hyperscaler lease execution, construction timelines, and capital market access, such that any disruption in long-term customer commitments or financing availability could materially impair cash flow generation and balance sheet stability
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 37.69 | 33.8 | 40.0 | 44.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Acceleration and Scale Expansion: Applied Digital Corporation delivered a substantial step-change in financial performance during fiscal second quarter 2026, with revenues rising to USD 126.6 million, representing a 250% year-over-year increase driven primarily by the commencement of operations at its Polaris Forge 1 AI Factory campus and the rapid scaling of its HPC Hosting segment . This growth reflects the Company’s successful transition toward hyperscaler-backed, long-duration infrastructure contracts.
Operational Milestones in AI Infrastructure: During the quarter, the Company achieved Ready-for-Service at the first building of Polaris Forge 1, delivering 100 MW of energized capacity on schedule, marking a critical execution milestone in the broader 400 MW campus developed for CoreWeave. In parallel, Applied Digital secured a long-term lease for 200 MW at Polaris Forge 2 with an investment-grade hyperscaler, significantly expanding its contracted AI compute footprint and long-term revenue visibility.
Segment Performance and Business Mix Evolution: The HPC Hosting Business emerged as the primary growth engine, generating USD 85.0 million in quarterly revenue, including tenant fit-out services and initial lease revenues as facilities became operational. Meanwhile, the legacy Data Center Hosting Business continued to deliver stable cash flows, producing USD 41.6 million in revenue, supported by full utilization across its Jamestown and Ellendale facilities, underscoring operational reliability and improved performance metrics.
Profitability Metrics and Earnings Quality: Although the Company remained in a net loss position, financial efficiency improved materially. Net loss attributable to common stockholders narrowed sharply to USD 31.2 million, compared with USD 129.0 million in the prior-year quarter, reflecting operating leverage from higher revenues and non-cash valuation gains. Adjusted EBITDA expanded to USD 20.2 million, more than tripling year over year, signaling the early inflection of cash-generating infrastructure assets coming online.
Cost Structure and Investment Phase Dynamics: Cost of revenues increased in line with the rapid scale-up of HPC operations, driven largely by tenant fit-out activities and higher energy usage across operating facilities. Selling, general and administrative expenses also rose materially due to accelerated stock-based compensation, professional fees tied to complex financing transactions, and personnel expansion necessary to support hyperscale infrastructure development.
Balance Sheet Transformation and Liquidity Strength: Applied Digital exited the quarter with approximately USD 2.3 billion in cash, cash equivalents, and restricted cash, alongside USD 2.6 billion in long-term debt, reflecting significant capital inflows from senior secured notes and preferred equity financing. Total assets expanded to over USD 5.2 billion, underscoring the rapid build-out of high-performance data center infrastructure while preserving strong liquidity to fund multi-year growth initiatives.
Strategic Positioning for Long-Term Cash Flow Generation: With 600 MW of hyperscaler capacity under contract and approximately USD 16 billion in prospective lease revenue, Applied Digital has established a scalable development and financing model designed to retain high common equity ownership while limiting corporate capital exposure. Management now anticipates exceeding its USD 1 billion NOI target within five years, supported by accelerating hyperscaler demand and repeatable campus expansion strategies.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Applied Digital Corporation (NASDAQ: APLD) at the closing market price of USD 37.69, as on Jan 25, 2026.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Information Technology Services
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| APLD Applied Digital Corporation |
1.02 2.24% | 46.59 | - | 526.32 | 28.81 | 5.82 | 32.25 | -7.4274 |
| IBM International Business Machines |
-13.25 5.05% | 249.10 | 32.79 | 20.83 | 3.32 | 8.50 | 4.06 | 20.10 |
| ACN Accenture plc |
-28.03 17.97% | 127.98 | 16.00 | 14.29 | 1.66 | 3.84 | 1.65 | 9.80 |
| INFY Infosys Ltd ADR |
-1.13 9.66% | 10.57 | 25.55 | 22.78 | 4.20 | 8.01 | 4.10 | 15.87 |
| FJTSY Fujitsu Ltd ADR |
- -% | 20.48 | 23.27 | 14.97 | 0.01 | 3.26 | 1.74 | 11.45 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on January 26, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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