A billionaire investor has taken a significant stake in Applied Digital (APLD), one of the leading independent GPU infrastructure providers.
Dan Loeb's Third Point hedge fund acquired a stake in Applied Digital Corporation (NASDAQ: APLD) in the second quarter, purchasing 22,000 shares valued at approximately $0.8 million as of June 30.
The company is scheduled to report fiscal first-quarter 2027 earnings on October 8 after market close, with analyst estimates calling for a loss of 30 cents per share and revenue of $134.86 million. This represents a significant year-over-year improvement in revenue, up from $64.22 million, though the per-share loss has widened from an estimated loss of 3 cents.
Applied Digital's fourth-quarter results significantly exceeded expectations, with revenue of $258.75 million compared to analyst estimates of $94.84 million. The digital infrastructure provider reported adjusted earnings of 4 cents per share, beating estimates for a 22-cent loss.
The company has signed leases representing approximately 1.41 gigawatts of contracted capacity and is marketing an additional 1.7 gigawatts across existing campuses, with current portfolio visibility extending beyond 5 gigawatts through 2032. As of May 31, long-term leases covered approximately 1,410 megawatts of contracted critical IT load across five campuses. Polaris Forge 1 currently operates at 175 megawatts of live capacity, while Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2 remain under construction at various stages.
A key competitive advantage is emerging from the credit quality of Applied Digital's AI infrastructure customers, which is reducing the company's borrowing costs. Work with CoreWeave, Inc. (NASDAQ: CRWV) helped establish the company's financing model, and management expects future leases to unnamed "high investment-grade hyperscalers" will enable similarly favorable financing terms going forward.
Wells Fargo recently initiated coverage with an Overweight rating and a $50 price target, citing Applied Digital's structural advantages in securing utility power allocations and multi-gigawatt site interconnects required for high-density AI workloads, particularly the lower regulatory risk associated with its power-advantaged footprint. Recent analyst actions include UBS initiating coverage with a Buy rating and $38 target on September 23, Rothschild & Co initiating with a Neutral rating and $22 target on September 21, and Wells Fargo's Overweight initiation with a $50 target on September 17. The stock carries a Buy consensus with an average price forecast of $61.65.
Over the past year, Applied Digital gained 12.78%, underperforming a peer group average of 92.92%. Among a comparable set of five stocks—GDS Holdings Limited (GDS), Fastly, Inc. (FSLY), GoDaddy Inc. (GDDY), Akamai Technologies Inc. (AKAM), and DigitalOcean Holdings, Inc. (DOCN)—DigitalOcean was the strongest performer at 291.49%, while GoDaddy was the weakest at minus 34.28%. Applied Digital outperformed GDS (down 22.14%) and GoDaddy but lagged Akamai (up 39.79%), Fastly (up 189.73%), and DigitalOcean.
APLD carries significant weight in several ETFs: 4.08% in the Global X Data Center & Digital Infrastructure ETF (NASDAQ: DTCR), 3.88% in the Global X Blockchain ETF (NASDAQ: BKCH), and 4.23% in the State Street Galaxy Hedged Digital Asset Ecosystem ETF (NASDAQ: HECO). Substantial inflows or outflows in these funds will likely trigger automatic buying or selling of the stock.
At the time of publication on Tuesday, Applied Digital shares were trading up 2.75% at $25.20.