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Applied Digital (APLD) is drawing attention after outlining plans for 1.4 gigawatts of contracted IT load and a North Dakota power buildout with Base Electron that targets about 1.2 gigawatts of natural gas generation.

See our latest analysis for Applied Digital.

Applied Digital's 1-day share price return of a 1.18% decline and 7-day share price return of a 13.76% decline contrast with a very strong 1-year total shareholder return of 68.59%, which points to recent momentum fading after a strong multi year run.

If you are interested in how other companies are positioning for AI infrastructure and data center demand, this is a good moment to scan the 55 AI infrastructure stocks

After a steep pullback following a very strong multi year return, Applied Digital now reflects both a large AI power pipeline and meaningful execution and loss risks. Is most of the stock's rerating already behind you, or still ahead?

Most Popular Narrative: 63.3% Undervalued

The most followed narrative values Applied Digital at a fair value of $73.36 compared with the last close of $26.89. That large gap rests on very specific assumptions about long term AI data center demand and contract visibility.

The accelerating industry need for high-density, geographically distributed data centers to support AI and machine learning workloads places Applied Digital in a favorable position, capitalizing on digital transformation trends that are set to drive ongoing utilization growth, improved asset values, and ultimately earnings expansion over the next several years.

Read the complete narrative. Read the complete narrative.

Want to see what justifies that kind of upside gap for Applied Digital? The narrative leans on rapid revenue expansion, a sharp margin swing and a future earnings profile that assumes sustained demand from hyperscalers.

Result: Fair Value of $73.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Applied Digital still faces heavy reliance on a few large hyperscaler and crypto customers, as well as sizeable debt that could pressure cash flows if projects slip.

Find out about the key risks to this Applied Digital narrative.

Another View on Applied Digital's Valuation

The AI narrative frames Applied Digital as undervalued at a fair value of $73.36, yet the current P/S ratio of 12.8x tells a different story. It is higher than the estimated fair ratio of 10.8x, the US IT industry average of 1.6x and the peer average of 6.1x. That rich revenue multiple raises a simple question for you as an investor: Is the market already paying in advance for much of the AI growth story?