Applied Digital Corporation (APLD) Down 4.6% — Time to Divest This Position?
Key Points
Applied Digital Corporation (APLD) extended its recent slide in the latest session, closing under pressure at $35.03. The stock fell 4.58% on the day, losing $1.68 from the prior close of $36.71 and giving back a portion of its recent run-up. Trading volume came in at about 20.7 million shares, notably below the 90-day average of roughly 31.5 million, suggesting the latest downdraft unfolded with lighter participation than typical. Even so, the pullback leaves the stock retreating further from its recent momentum peak and reinforces a pattern of choppy, downside-biased trading.
From a longer-term perspective, APLD remains well off its 52-week high of $40.20 set on Oct. 16, 2025, now trading more than $5 below that peak and losing ground after testing that resistance area. The stock is still dramatically above its 52-week low of $3.31, underscoring how far it has climbed, but the recent reversal highlights growing headwinds at these elevated levels. Within the broader tech and cloud infrastructure complex, names such as CrowdStrike (CRWD), Snowflake (SNOW), and Datadog (DDOG) have also seen periods of heightened volatility, yet APLD’s latest pullback stands out as it retreats from near-record territory. Overall, the price action points to a stock under pressure, with buyers stepping back and upside momentum fading, at least in the near term.
Why Applied Digital Corporation Price is Moving Lower
Applied Digital shares are coming under pressure as investors look past headline-grabbing growth and focus on mounting execution and profitability risks. The latest earnings release showcased exceptional top-line expansion — Q2 2026 revenue surged 250% year over year to $126.6 million, with nearly 100% sequential growth. Yet the company still posted a GAAP net loss of $31.2 million and a profit margin near negative 45%, underscoring that the AI-focused HPC hosting business remains heavily investment-driven. Even near break-even on an adjusted basis has not been enough to offset concerns that sustained losses could persist as Applied Digital races to scale its “AI Factory” campuses.
Those worries are reinforced by the company’s aggressive capital deployment and valuation backdrop. The additional $562.5 million draw from Macquarie’s preferred equity facility, plus new investments such as the $15 million Corintis stake and the planned ChronoScale spin-out, signal a strategy that requires substantial ongoing funding. In the current environment, investors are increasingly cautious toward high-growth, unprofitable AI infrastructure names, particularly after APLD “soared over the past year” and has been flagged in industry commentary as potentially overvalued relative to its lack of current earnings. With sector peers like CrowdStrike, Snowflake, and Datadog also facing scrutiny over rich multiples and profit timing, sentiment across AI data center and HPC infrastructure has turned more selective. For Applied Digital, that means strong revenue growth alone is no longer enough to support prior price levels, and the stock is feeling the downside of that recalibration.
What is the Applied Digital Corporation Rating - Should I Sell?
Weiss Ratings assigns APLD an E rating. Current recommendation is Sell. The stock was recently downgraded on 1/9/2026, reinforcing that prior concerns have not been resolved. This is our lowest tier and signals a highly unfavorable risk/reward profile for investors, even within the volatile Information Technology space.
APLD’s weaknesses are broad-based. The Very Weak Efficiency Index points to serious issues with how the company converts its assets and capital into profitable returns. That shows up directly in its financials: despite headline revenue growth of 250.05%, the company is still operating with a deeply negative profit margin of -44.79% and a forward P/E ratio of -67.49, indicating persistent losses and a lack of clear earnings visibility. In our model, that kind of growth, by itself, does not offset the operational and earnings risk.
The contrast between an Excellent Total Return Index and a Weak Volatility Index is especially concerning. Past gains have come with substantial price swings, which can quickly erase shareholder value when sentiment turns. The Fair Growth Index and Good Solvency Index show that the business has some positive attributes, but they are not strong enough to overcome the structural profitability and volatility problems that dominate the overall E (Sell) rating.
Even compared with other higher-risk tech names, APLD screens poorly. Sector peers such as CrowdStrike Holdings, Inc. (CRWD, D), Datadog, Inc. (DDOG, D+), and Snowflake Inc. (SNOW, D-) all carry higher ratings, indicating relatively better—though still cautious—profiles. APLD’s E rating makes it a weaker candidate than these peers on a risk-adjusted basis.
About Applied Digital Corporation
Applied Digital Corporation (APLD) operates in the Information Technology sector, focusing on Software and Services tied to high-performance computing (HPC) and artificial intelligence (AI) workloads. Based in Dallas, Texas, the company designs, develops, and operates digital infrastructure intended for compute-intensive applications across North America. Its operations are structured into two primary segments: the Data Center Hosting Business and the HPC Hosting Business. Through these segments, Applied Digital provides infrastructure services that cater to both crypto mining customers and users requiring GPU-based computing for AI, machine learning, and other HPC tasks.
The company’s offering centers on building and managing data centers tailored to specialized workloads rather than general-purpose enterprise IT. This includes the design, construction, and ongoing management of facilities that support large-scale GPU deployments and energy-intensive computing requirements. Applied Digital’s legacy in crypto-focused infrastructure, including services to crypto mining customers, reflects a dependence on highly cyclical and often volatile end markets. Its lease agreement with CoreWeave for an additional 150MW at the Polaris Forge 1 campus in Ellendale, North Dakota underscores a strategy of concentrating capacity with a limited number of large counterparties, which can heighten customer concentration risk. The company’s evolution from its previous identity as Applied Blockchain, Inc. to Applied Digital Corporation in November 2022 highlights a shift in branding toward broader digital infrastructure and HPC, but its business remains exposed to niche, capital-intensive segments of the technology infrastructure landscape where competitive pressures and execution risk are significant.
Investor Outlook
With an E (Sell) Weiss Rating, Applied Digital Corporation (APLD) currently carries a high-risk profile, so investors may want to monitor whether recent downside momentum stabilizes or accelerates. Watch for changes in the company’s fundamentals, shifts in broader Information Technology sentiment, and any future rating revisions that could alter its risk/reward balance. See full rankings of all E-rated Information Technology stocks inside the Weiss Stock Screener.
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