APLD Stock Soar 37% Weekly Toward $20, as Growth Projects Offset Valuation Worries
Applied Digital (NASDAQ: APLD) has been navigating turbulent market conditions, with insider selling, high valuations, and growing...
Quick overview
- Applied Digital (APLD) has experienced significant stock volatility, including a 25% drop followed by a sharp recovery driven by a lease deal with CoreWeave.
- Insider selling, particularly by CEO Wes Cummins, has raised investor concerns amid high valuations and competition in the AI infrastructure sector.
- The company plans to build a $3 billion data center, Polaris Forge 2, which aims to enhance its capacity and long-term revenue prospects.
- Despite strong growth in revenue and positive Q4 results, APLD faces challenges related to its high price-to-sales ratio and the need for consistent earnings.
Applied Digital (NASDAQ: APLD) has been navigating turbulent market conditions, with insider selling, high valuations, and growing competition weighing on sentiment. Yet, shares staged a sharp comeback this week, underscoring both investor caution and renewed optimism about the company’s growth trajectory.
Stock Swings and Insider Selling
After peaking at record highs in August, APLD stock tumbled 25% in less than two weeks, bottoming at $13.16 early this week. Investor nerves were rattled further when CEO Wes Cummins sold 400,000 shares on September 3 for $6.1 million, an average of $15.26 per share. The timing fueled concerns just as AI infrastructure peers came under pressure from Alibaba’s announcement of a new AI processor.
APLD Chart Weekly – Leaving Behind MAs
Despite the unease, APLD reversed course in spectacular fashion, logging five consecutive daily gains. The rebound was driven by a 37% surge this week, taking shares back above $18. The key catalyst was news of a lease deal with CoreWeave, which expanded Applied Digital’s projected contracted revenue to nearly $11 billion. Where this money comes from is a mystery, because it’s not coming from the public. That sent the stock price above $18.60, in one of the strongest weeks for APLD.
Valuation Pressures in a Hot Sector
The CoreWeave deal cements APLD’s foothold in the high-performance computing (HPC) and blockchain hosting space, putting it in direct competition with Core Scientific and TeraWulf. However, questions about lofty valuations remain.
Second-quarter revenue grew 41.3% year over year to $38.01 million but missed Wall Street forecasts. With a price-to-sales ratio of 13.5x—well above the industry average of 3.5x—Applied Digital is seen as vulnerable to profit-taking after last month’s spike to $17.60.
Still, enthusiasm for AI infrastructure remains high. Super Micro Computer’s launch of systems using Nvidia’s Blackwell chips and Oracle’s blockbuster deal with OpenAI highlight strong enterprise spending in the sector, even as public demand remains harder to gauge.
Growth Ambitions: Polaris Forge 2
To maintain its momentum, Applied Digital unveiled plans for the $3 billion Polaris Forge 2 data center in North Dakota. Spanning 900 acres and expected to generate 280 MW of capacity, the facility is set for completion in 2027 and will employ more than 200 workers. The company also confirmed discussions with a major U.S. hyperscaler, which could provide a long-term revenue anchor and boost investor confidence.
Wall Street was further encouraged by stronger-than-expected Q4 results. Losses came in at just $0.03 per share, well ahead of the forecasted $0.14 loss, thanks to tighter cost controls and operational efficiencies.
Outlook: Applied Digital remains a volatile play in the AI and data center infrastructure market—caught between sky-high growth potential and lingering concerns about insider activity and valuations. While the CoreWeave deal and Polaris Forge 2 highlight bold expansion, the company must deliver consistent earnings momentum to justify its elevated stock price.
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