Recent analyst attention on Applied Digital (APLD) has centered on its long-term data center leases with partners like CoreWeave and its fully leased facilities. Together, these elements highlight its role as a key AI infrastructure provider.

Despite bullish commentary around its long-term AI data center leases, the recent share price has cooled, with a 1-month share price return of a 24.46% decline and a year-to-date share price return of a 5.19% decline. At the same time, the 1-year total shareholder return remains very large and the 3-year total shareholder return is more than 10x. This suggests that longer term momentum has been strong while shorter term enthusiasm has eased.

If this kind of AI infrastructure story interests you, it can be useful to compare Applied Digital with other potential beneficiaries and see how they stack up in terms of market traction and risk using the 34 AI infrastructure stocks.

With the stock down in the short term, analysts setting higher price targets and the business still loss making, the key question is whether investors are getting Applied Digital at a discount or if the market is already pricing in future growth.

Most Popular Narrative: 30.2% Undervalued

According to Vestra, the latest fair value estimate of $38.20 sits well above Applied Digital's last close of $26.65, framing the stock as materially discounted in that narrative.

The fair value for Applied Digital (APLD) is calculated using my fair value method by applying a 22x EV/EBITDA multiple to the 2027 projected Adjusted EBITDA of $485 million, reflecting the high-visibility cash flows from its 15-year hyperscale leases. This results in a fair value of $38.20 in local currency (USD). At the current price of $27.03, the stock is trading at a 29.2% discount to its intrinsic value.

Want to see what powers that $38.20 figure? The narrative highlights a rapid EBITDA build out, long AI lease terms and a premium multiple usually reserved for mature platforms.

Result: Fair Value of $38.20 (UNDERVALUED)

However, this hinges on heavy use of debt and long data center build times, so any financing hiccup or project delay could quickly challenge that optimistic view.

Another View: Price To Sales Sends A Different Signal

That $38.20 fair value hinges on a 22x EV/EBITDA multiple and long leases, but the current P/S of 28.2x paints a tougher picture. It sits far above the US IT industry at 1.7x, peers at 4.7x, and even the fair ratio of 9.1x. This points to meaningful valuation risk if expectations reset.

For a closer look at how this gap could matter for your own approach, check the valuation breakdown in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment clearly split between strong long term returns and short term valuation questions, it makes sense to move quickly and check the details for yourself using the 1 key reward and 3 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.