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Meet the Underrated Artificial Intelligence (AI) Stock That Could Soar 255% in a Year, According to Wall Street
The Motley Fool • • business
Key Points:
- Applied Digital (APLD), a company specializing in AI data centers, has seen its stock drop 27% in three months due to investor concerns over high financing costs and increasing debt used to expand data center capacity.
- Despite recent stock declines, Applied Digital's revenue surged 322% year-over-year in Q1 fiscal 2027, driven by the addition of 75 MW of data center capacity, with plans to increase total capacity to 600 MW within 12 months and 3.5-4 GW by 2030.
- The company holds $36 billion in contracted lease revenue with 15-year base terms and a potential $86 billion pipeline if renewal options are exercised, supporting strong long-term growth prospects.
- Applied Digital's debt rose sharply to $6.4 billion in Q1 fiscal 2027, but over 80% matures in 2031 or later; management expects high net operating income margins (over 80%) at existing campuses to cover interest expenses and debt repayment starting in 2029.
- Wall Street remains optimistic, with a median 12-month price target of $69 (255% upside) and 18 of 20 analysts rating the stock a buy, citing its rapid revenue growth and attractive valuation at a price-to-sales ratio of 6.5.
