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The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $134.10 million, reflecting a year-over-year increase of 108.81%.
The consensus mark for loss for the quarter is pegged at 26 cents per share, unchanged over the past 30 days. This also marks a sharp decline from the year-ago quarter's loss of 11 cents.
Image Source: Zacks Investment Research
The company’s earnings fell short of the Zacks Consensus Estimate in three of the trailing four quarters and matched once, averaging a negative surprise of 99.72%.
Applied Digital Corporation Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for Applied Digital this time around. According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here, as you can see below.
APLD has an Earnings ESP of 0.00% at present and a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Shaping APLD’s Upcoming Results
Applied Digital entered fiscal 2027 with substantial financing commitments to fund its rapid AI data-center expansion program. As of May 31, 2026, the company’s term loans carried a 7.1% weighted-average interest rate, while fiscal 2026 interest expense was $85.3 million and net interest expense was $29.5 million. APLD also completed a $2.15 billion offering of 6.75% senior secured notes and, in June 2026, a $1.59 billion offering of 7% senior secured notes to fund data-center projects. While these financings support capacity expansion, the higher debt burden is expected to increase interest costs, while the resulting project assets will add depreciation as facilities become operational. Consequently, APLD is anticipated to have experienced greater earnings and cash-flow pressure in the quarter under review.
Applied Digital’s AI Factory expansion requires substantial capital before the related facilities can generate the full amount of projected lease revenues. Fiscal 2026 capital expenditures totaled approximately $3.04 billion, including $2.99 billion for HPC Hosting. Construction delays, financing availability, higher costs, parts and labor shortages, permitting issues and power-related constraints could increase expenses or delay project completion. This risk remains relevant as several campuses are still under construction. As a result, APLD is likely to have faced elevated development spending and execution-related pressure in fiscal first quarter 2027, potentially limiting near-term margin expansion despite its substantial contracted lease pipeline.
Applied Digital remained highly dependent on a limited number of customers in fiscal 2026. Customer A accounted for 59% of total revenues, while Customer B and Customer C represented 25% and 12%, respectively. The company’s significant customer concentration could cause operating results to suffer materially if a large customer were lost or its financial condition deteriorated. At the same time, APLD’s HPC leases are generally long-term, take-or-pay and non-cancellable, which provides important protection against near-term revenue loss. Nevertheless, the concentration leaves APLD exposed to the financial condition and business decisions of a small customer base, making customer concentration a potential source of uncertainty for first-quarter fiscal 2027 revenues and cash flow.
However, robust AI infrastructure demand should strengthen growth visibility. Applied Digital is developing five multibillion-dollar AI Factory campuses for hyperscalers and CoreWeave, with approximately 1.4 GW of contracted capacity under construction. The company was also marketing an additional 1.7 GW across multiple states, highlighting continued demand for its AI infrastructure. Management characterized demand for high-power-density, purpose-built AI data centers as extremely robust. With substantial contracted capacity progressing toward delivery, APLD is likely to have benefited from strong AI infrastructure demand and improved growth visibility in the quarter to be reported.
APLD’s Stock Price Performance & Valuation
Over the past three months, Applied Digital stock has declined 19.6%, significantly underperforming the Zacks Financial-Miscellaneous Services industry and the broader Zacks Finance sector, which fell 4.1% and 2.7%, respectively, over the same period.
The stock has also lagged its peers, including Circle Internet Group (CRCL - Free Report) , Virtu Financial (VIRT - Free Report) and SoFi Technologies (SOFI - Free Report) . During the same period, Circle Internet Group gained 27.8%, while Virtu Financial and SoFi Technologies lost 0.6% and 10.3%, respectively. Applied Digital’s three-month decline reflects concerns over high spending, rising debt and delayed revenue growth. Heavy AI data-center investments and higher interest costs are weighing on finances, while several contracted projects are still under construction. In addition, fiscal 2026 benefited from significant tenant fit-out revenues, which may not continue at the same pace.
APLD 3-Month Stock Performance Chart
Image Source: Zacks Investment Research
From a valuation perspective, APLD appears overvalued, as suggested by the Value Score of F. The stock trades at a trailing 12-month P/S ratio of 11.54X, far above the industry average of 2.46X, suggesting that investors are paying a significant premium for its growth prospects. Its valuation also looks stretched compared with peers, including Circle Internet Group at 7.7X, SoFi Technologies at 3.86X and Virtu Financial at just 1.35X.
APLD Trailing 12-Month P/S Ratio
Image Source: Zacks Investment Research
Key Considerations on APLD Stock
Applied Digital faces several challenges as it enters first-quarter fiscal 2027. The company remains in a loss-making position while its AI data-center expansion requires significant ongoing investment, creating continued funding and execution pressure. Its reliance on a limited customer base also increases revenue concentration risk. At the same time, delays, higher construction costs, permitting issues or other project-related challenges could postpone the realization of contracted revenues. Competition from larger, better-capitalized data-center operators adds another layer of pressure. Together, these factors could limit near-term profitability and make APLD’s growth strategy more capital-intensive and execution-sensitive.
Conclusion
Ahead of the release of APLD's first-quarter fiscal 2027 results, the decision to exit the position — or ‘fold’ — appears more logical than holding the shares. Despite strong AI infrastructure demand, APLD faces high valuation, rising financing costs, customer concentration and execution risks. Investors may want to wait for improved operating performance before considering the stock.
View the Zacks #1 Rank List
Image: Zacks
Applied Digital to Post Q1 Earnings: Is It Time to Hold or Fold?
Key Takeaways
Applied Digital (APLD - Free Report) is scheduled to report first-quarter fiscal 2027 results after the market closes on Oct. 7, 2026.
The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $134.10 million, reflecting a year-over-year increase of 108.81%.
The consensus mark for loss for the quarter is pegged at 26 cents per share, unchanged over the past 30 days. This also marks a sharp decline from the year-ago quarter's loss of 11 cents.
Image Source: Zacks Investment Research
The company’s earnings fell short of the Zacks Consensus Estimate in three of the trailing four quarters and matched once, averaging a negative surprise of 99.72%.
Applied Digital Corporation Price and EPS Surprise
Applied Digital Corporation price-eps-surprise | Applied Digital Corporation Quote
Q1 Earnings Whispers for APLD Stock
Our proven model does not conclusively predict an earnings beat for Applied Digital this time around. According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here, as you can see below.
APLD has an Earnings ESP of 0.00% at present and a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Shaping APLD’s Upcoming Results
Applied Digital entered fiscal 2027 with substantial financing commitments to fund its rapid AI data-center expansion program. As of May 31, 2026, the company’s term loans carried a 7.1% weighted-average interest rate, while fiscal 2026 interest expense was $85.3 million and net interest expense was $29.5 million. APLD also completed a $2.15 billion offering of 6.75% senior secured notes and, in June 2026, a $1.59 billion offering of 7% senior secured notes to fund data-center projects. While these financings support capacity expansion, the higher debt burden is expected to increase interest costs, while the resulting project assets will add depreciation as facilities become operational. Consequently, APLD is anticipated to have experienced greater earnings and cash-flow pressure in the quarter under review.
Applied Digital’s AI Factory expansion requires substantial capital before the related facilities can generate the full amount of projected lease revenues. Fiscal 2026 capital expenditures totaled approximately $3.04 billion, including $2.99 billion for HPC Hosting. Construction delays, financing availability, higher costs, parts and labor shortages, permitting issues and power-related constraints could increase expenses or delay project completion. This risk remains relevant as several campuses are still under construction. As a result, APLD is likely to have faced elevated development spending and execution-related pressure in fiscal first quarter 2027, potentially limiting near-term margin expansion despite its substantial contracted lease pipeline.
Applied Digital remained highly dependent on a limited number of customers in fiscal 2026. Customer A accounted for 59% of total revenues, while Customer B and Customer C represented 25% and 12%, respectively. The company’s significant customer concentration could cause operating results to suffer materially if a large customer were lost or its financial condition deteriorated. At the same time, APLD’s HPC leases are generally long-term, take-or-pay and non-cancellable, which provides important protection against near-term revenue loss. Nevertheless, the concentration leaves APLD exposed to the financial condition and business decisions of a small customer base, making customer concentration a potential source of uncertainty for first-quarter fiscal 2027 revenues and cash flow.
However, robust AI infrastructure demand should strengthen growth visibility. Applied Digital is developing five multibillion-dollar AI Factory campuses for hyperscalers and CoreWeave, with approximately 1.4 GW of contracted capacity under construction. The company was also marketing an additional 1.7 GW across multiple states, highlighting continued demand for its AI infrastructure. Management characterized demand for high-power-density, purpose-built AI data centers as extremely robust. With substantial contracted capacity progressing toward delivery, APLD is likely to have benefited from strong AI infrastructure demand and improved growth visibility in the quarter to be reported.
APLD’s Stock Price Performance & Valuation
Over the past three months, Applied Digital stock has declined 19.6%, significantly underperforming the Zacks Financial-Miscellaneous Services industry and the broader Zacks Finance sector, which fell 4.1% and 2.7%, respectively, over the same period.
The stock has also lagged its peers, including Circle Internet Group (CRCL - Free Report) , Virtu Financial (VIRT - Free Report) and SoFi Technologies (SOFI - Free Report) . During the same period, Circle Internet Group gained 27.8%, while Virtu Financial and SoFi Technologies lost 0.6% and 10.3%, respectively. Applied Digital’s three-month decline reflects concerns over high spending, rising debt and delayed revenue growth. Heavy AI data-center investments and higher interest costs are weighing on finances, while several contracted projects are still under construction. In addition, fiscal 2026 benefited from significant tenant fit-out revenues, which may not continue at the same pace.
APLD 3-Month Stock Performance Chart
Image Source: Zacks Investment Research
From a valuation perspective, APLD appears overvalued, as suggested by the Value Score of F. The stock trades at a trailing 12-month P/S ratio of 11.54X, far above the industry average of 2.46X, suggesting that investors are paying a significant premium for its growth prospects. Its valuation also looks stretched compared with peers, including Circle Internet Group at 7.7X, SoFi Technologies at 3.86X and Virtu Financial at just 1.35X.
APLD Trailing 12-Month P/S Ratio
Image Source: Zacks Investment Research
Key Considerations on APLD Stock
Applied Digital faces several challenges as it enters first-quarter fiscal 2027. The company remains in a loss-making position while its AI data-center expansion requires significant ongoing investment, creating continued funding and execution pressure. Its reliance on a limited customer base also increases revenue concentration risk. At the same time, delays, higher construction costs, permitting issues or other project-related challenges could postpone the realization of contracted revenues. Competition from larger, better-capitalized data-center operators adds another layer of pressure. Together, these factors could limit near-term profitability and make APLD’s growth strategy more capital-intensive and execution-sensitive.
Conclusion
Ahead of the release of APLD's first-quarter fiscal 2027 results, the decision to exit the position — or ‘fold’ — appears more logical than holding the shares. Despite strong AI infrastructure demand, APLD faces high valuation, rising financing costs, customer concentration and execution risks. Investors may want to wait for improved operating performance before considering the stock.
You can see the complete list of today’s Zacks #1 Rank stocks here.