Should I Buy Applied Digital (APLD)? Finance YouTuber Analysis

The YouTuber mentions Leopold Aeschbacher's position in Applied Digital. This is seen as a bet on data center capacity, power access, or infrastructure that can be repurposed for AI workloads, aligning with Aeschbacher's rotation towards the 'deployment layer' of AI.

“Core Scientific, Applied Digital, and Ride Platforms at about 142 million dollars.”

The YouTuber is bullish on Applied Digital (APLD), an infrastructure provider for high-performance computing and AI data centers. He highlights the company's shift from crypto to AI compute, focusing on large-scale data center campuses with high-density power environments crucial for GPU clusters. He believes APLD is solving the bottleneck of electricity, cooling, and physical infrastructure for AI, and that the market will eventually value it as a strategic AI infrastructure play. He has a price target of $70 per share.

“I have a price target on APLD of $70 per share. Apply digital is basically building infrastructure for high performance computing and AI data centers.”

Applied Digital holds promise in specialized infrastructure but is characterized by deep red margins and high cash burn rates. The analyst advises that it is entirely dependent on continuous shareholder dilution to survive, making it a tactical play for aggressive accounts with strict risk management.

“Iris Energy and Applied Digital remain interesting forward growth stories for aggressive accounts, but their current cash burn rates mean they are entirely dependent on continuous shareholder dilution just to survive.”

The YouTuber advises caution with Applied Digital, categorizing it as a 'story that needs to become a business fast.' Despite some positive metrics, its lack of profitability and high debt levels make it a risky proposition that could lead to dilution, suggesting it's not a recommended tactical play at this time.

“Apply digital and coreweave are stories that need to become businesses fast.”

The YouTuber advises against holding Applied Digital long-term due to its lack of profitability, high debt, and extreme customer concentration (98% of revenue from two clients). While acknowledging strong revenue growth and significant contracts, he argues the company lacks a defensible moat and is highly vulnerable to any missteps or contract changes, making it a high-risk play rather than a stable investment.

“Applied Digital isn't a stock you hold for 10 years. It's a trade you monitor every week.”

The YouTuber is open to short-term trading of Applied Digital, including selling premium or taking tactical positions, because the underlying contracts and demand for AI infrastructure are real, attracting institutional capital. However, this is contingent on favorable market setups, acknowledging the company's structural risks and volatility.

“But I am open to trading it, selling premium, taking tactical positions when the setup is right because the contracts are real, the demand is real, and institutional capital is flooding into this space.”

The analyst maintains a 'hold' rating on Applied Digital, concluding it is fairly valued rather than undervalued, despite a recent price drop. This assessment is based on a detailed discounted cash flow (DCF) analysis, which projects the company to reach profitability by 2028 and generate significant free cash flow by 2029, but also factors in a high weighted average cost of capital (WACC) of 19.81% due to its risky business model and high beta.

“So, to answer the question, is it an undervalued stock to buy? No, I would say not. As we saw in the calculation, it looks fairly valued. And so, given all of the other dynamics surrounding the company, I've applied a hold rating for Applied Digital Corporation.”

The YouTuber recommends Applied Digital, a data center developer focused on AI workloads, due to its substantial contracted lease backlog ($23 billion vs. $13 billion market cap), indicating it's undervalued. He points to a recent 15-year, $7.5 billion deal with a hyperscaler and the strategic spin-off of Chronoscale as positive developments for future growth.

“Applied Digital's market cap sits at roughly $13 billion, but their contracted lease backlog tops $23 billion. The company is priced at less than half the value of the contracts that are already signed.”

The YouTuber recommends Applied Digital for its rapid revenue growth in large-scale AI data centers, driven by securing long-duration, low-cost electricity in power-rich regions. He believes the market underestimates its earning power, as gross margins are expected to expand significantly once facilities are fully leased. The key metric is megawatts placed into service.

“The entire model is built on securing long-duration lowcost electricity and locking them into long-term leases before the capacity shortages begin to force prices higher.”

The YouTuber suggests buying Applied Digital for the long term, especially on a pullback, due to its strong fundamentals. He notes its role in powering the AI boom by constructing AI factories, its significant contracts with major players like CoreWeave and a US-based Hyperscaler, and its potential to reach 1 GW capacity by 2027.

“My system flags this as a watch right now because the short-term indicators, specifically the rate of change over 30% and the ADX over 47% suggests that the stock may be overextended right now. And the translation is that it's had a very strong run and it could pull back in the near term.”

The YouTuber recommends buying APLD on a pullback, noting its current price of $37 is close to his near-term target of $40. He believes it has further upside to $60, suggesting a technical setup for entry after a dip.

“APOD Applied Digital is sitting at 37. Near-term price target, everybody write this down, is $40. Okay, so it's getting close to my top, but it's going to pull back. That's your chance to get in and go crazy for me.”

The YouTuber recommends APLD as a long-term investment, comparing its potential longevity to Palantir. He highlights its past price appreciation from $4-$8 to $34, suggesting it's a 'best-in-class' play for wealth building over the next decade.

“But my point being, just like I'm telling you, Lyft going to go to 30. It's going to go way past 30, but I need you to understand the process. This one did the same thing. This one was $8. This was $4 and now it's $34.”

The YouTuber highlights APLD as a stock that has shown significant upward movement, referencing specific candle patterns and support levels. He suggests that understanding these technical indicators can lead to substantial gains, implying a buy based on technical analysis.

“Everybody look at this. Okay, this is APLD. One of the plays I got for you guys today. One of the plays that $1 turn into $100.”

The YouTuber recommends buying APLD at $9.45 or lower, stating that if it breaks $10, it could go to $15. He emphasizes getting a good entry point for significant returns, suggesting it's a stock that will bounce back from an 'unjust crash'.

“I'm looking at APLD. It's 946. I need to get it at $945 or lower because coach already told me it's going to $10 and if we can break through 10 then that opens the door for 15.”

The YouTuber recommends buying APLD at or below $10.94, emphasizing the importance of a low entry price for significant gains. He suggests that buying low allows investors to overcome the issue of holding a play too long and still achieve decent returns.

“I need you to get this at this price and or lower. Preferably the lower is what the emphasis is always on with coach.”

The YouTuber suggests buying APLD if it drops to $7 or $8, or specifically below $10, because he believes it has the potential to run to $12 and beyond. He notes that any price shown in the market is significant and expects it to return to $10.78.

“you might have a chance to get this at 7 or $8 and now you see the level if you get it low you are already know write this down this play can come back to 1078”

Nvidia has acquired a stake in Applied Digital, a company focused on data center infrastructure for AI. The YouTuber sees it as a key player in the AI data center buildout, with strong revenue growth expected and potential for repurposing existing blockchain infrastructure for high-performance computing.

“Nvidia now also owns 7.7 million shares of applied digital took her apld worth $75 million or about 3.2% ownership of the company with shares of that digital infrastructure and cloud provider up 118% in the past year applied is at the heart of the next wave of AI that data center buildout the company develops builds and operates data centers and Cloud infrastructure with a focus to those specific needs for Accelerated Computing in AI so you can see why Nvidia would want to be involved in that data centers look to be the next big bottleneck for AI Revolution after supplying those chips just having enough power and the data centers to process it all and one really interesting devel M I've been following has been the transition from blockchain data centers to those needed for the AI operations as the Bitcoin having continues and profitability for mining decreases we're seeing those data centers repurposed for that high performance Computing and I think applied as position to do that with its existing blockchain infrastructure and while it's not quite a any stock it is the growth we like to see with 50% plus Revenue growth expected this year on next and while it's still posting negative earnings it's got all the financial backing it needs to grow”