Applied Digital (APLD) is back in focus after bringing another 75 MW of AI capacity online at its fully leased Polaris Forge 1 campus, even as sector-wide sentiment for AI infrastructure stocks remains volatile.

Applied Digital’s share price has pulled back sharply in the near term, with 1-day, 7-day and 30-day share price returns all down double digits. At the same time, the 90-day share price return of 10.51% and 1-year total shareholder return of 233.08% point to momentum that has cooled but not reversed.

This mix of short-term weakness and strong longer-term total shareholder returns comes as investors weigh fresh AI capacity coming online at Polaris Forge 1, sector-wide risk reassessment, and recent index reclassifications that shifted Applied Digital into larger-cap benchmarks.

If you are looking beyond Applied Digital to other companies building out the plumbing for AI, it could be a good moment to screen for 52 AI infrastructure stocks

Applied Digital now trades at $30.71 while the consensus price target sits far higher, a gap widened by the recent pullback. Does fair value sit closer to today’s price or the top of that estimate range?

Most Popular Narrative: 58.1% Undervalued

Applied Digital’s most followed narrative points to a fair value of $73.36 versus the last close at $30.71, putting a wide gap between price and what that narrative suggests the business could be worth.

The company has recently secured long-term (15-year) leasing agreements with CoreWeave, a major AI hyperscaler, for its purpose-built AI/HPC data center campus, Polaris Forge 1, representing a total of $7 billion in contracted revenue and a multi-year, recurring, and predictable revenue stream that directly supports future revenue growth and cash flow stability.

Curious what kind of revenue ramp, margin shift, and valuation multiple are baked into that fair value? The narrative leans on aggressive scaling and a rich future profit multiple to justify today’s gap between model and market.

Result: Fair Value of $73.36 (UNDERVALUED)

However, Applied Digital’s heavy use of debt and reliance on a small group of large hyperscaler and crypto customers could quickly challenge this undervalued narrative if conditions shift.

Another View on Applied Digital’s Valuation

The popular narrative frames Applied Digital as significantly undervalued versus a fair value of $73.36, yet the company’s pricing tells a different story. At a P/S of 27.5x versus 1.9x for the US IT sector, and a fair ratio of 25x, this stock already embeds aggressive expectations. Is that premium a cushion, or is it a risk if growth stumbles?

For a closer look at how this pricing gap could cut both ways for investors, check the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If this mix of optimism and concern around Applied Digital feels familiar, act quickly and test the data yourself against both sides of the story by weighing the 1 key reward and 4 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.