APLD - Applied Digital: Blockchain Industry And Growing Capacity Imply Undervaluation

2024-04-16 08:59:03 ET

Summary

• Applied Digital Corporation has robust demand across its businesses, and analysts expect EPS growth in 2025.
• The company has partnerships with large companies like Dell, NVIDIA, Goldman Sachs, and JPMorgan, which could bring net sales growth and attract new investors.
• The CEO's background in the technology industry and connections with venture capitalists may lower the company's WACC and bring business growth.

Applied Digital Corporation ( APLD ) recently noted robust demand across the globe and analysts expect growing EPS in 2025. The numbers delivered in the most recent quarter were lower than expected, however management mentioned a new LOI signed with a hyperscaler for a 400 MW capacity lease. I believe that the business profile of the CEO, the exposure to the blockchain industry, and existing partners will most likely enhance future capital supply and capacity generation. There are some risks from lack of financing, lower FCF growth than expected, or intense competition. However, I believe that APLD stock does look undervalued.

Applied Digital

Applied Digital is a designer, builder, and operator of next-generation digital infrastructure, with three main lines of business, artificial intelligence cloud services, high-performance data center hosting, and cryptographic data hosting. ...

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