Needham keeps Applied Digital at Buy with $83 target after Q4 results

Needham keeps Applied Digital at Buy with $83 target after Q4 results

William Foxley

Tue, July 28, 2026 at 4:46 PM GMT+3 2 min read

• APLD +1.38%

Needham maintained its Buy rating and $83 price target for Applied Digital (NASDAQ: APLD), implying roughly 215% upside from the bank's $26.38 reference price on July 27.

The target reflects Needham's view that Applied Digital can execute across its expanding AI data-center portfolio. Fiscal fourth-quarter results showed operating progress, while advanced discussions for another 250 MW could extend the company's contracted capacity if they result in signed leases.

Needham bases its $83 target on a 21× enterprise-value-to-EBITDA multiple applied to its discounted fiscal 2029 adjusted-EBITDA estimate. The bank forecasts $2.33 billion of adjusted EBITDA that year, down from its previous $2.37 billion estimate.

Recurring HPC rent supports the valuation

Applied Digital reported fiscal fourth-quarter revenue of $258.7 million and adjusted EBITDA of $42.4 million. The headline revenue figure was heavily influenced by $152.4 million of low-margin tenant fit-out services, which Needham described as one-time work rather than recurring rental income.

Excluding those services, HPC base-rent revenue reached $44.1 million, close to Needham's $44.3 million estimate. The quarter included the first full contribution from the 100 MW first building at Polaris Forge 1.

HPC net operating income carried a 91% margin, exceeding management's guidance in the mid-80% range. Needham said the result placed Applied Digital's lease economics closer to those of listed peers, although the bank continues to model an HPC NOI margin near 85%.

Construction progress also supported the bank's thesis. Polaris Forge 1's second building brought another 75 MW to ready-for-service status in June, lifting live capacity at the campus to 175 MW. Management said its projects remained on time and on budget.

Another 250 MW remains unsigned

Applied Digital is in advanced discussions with two existing counterparties covering 250 MW of critical IT load. The talks include 100 MW at Polaris Forge and 150 MW at Delta Forge.

Needham included the Polaris Forge capacity in its fiscal 2028 model. The Delta Forge opportunity was less expected, although the bank previously assumed 200 MW of available capacity at an unidentified site. Formalizing the 150 MW project therefore reduced its modeled operating capacity by 50 MW compared with that earlier assumption.

Neither potential lease has been signed. The Delta Forge expansion corresponds to expected 2028 power availability, according to Needham, making customer commitments and infrastructure delivery central to the timing.

The $83 target depends on Applied Digital delivering across its development pipeline. Power availability, construction schedules, financing conditions, customer concentration and final lease commitments could change the company's capacity growth or projected returns.

Needham said it received investment-banking compensation from Applied Digital during the past 12 months, managed or co-managed a recent securities offering for the company, and makes a market in APLD shares.