Applied Digital Grows Revenue 322.4%, but $4.3B of Cash Burn Keeps the Model on Sell

Applied Digital Corporation led our watchlist’s one-day gainers, and its revenue growth is extraordinary: up 322.4% over the trailing twelve months. But the company, which builds and operates data centers for AI and high-performance computing customers, is spending far more than it brings in, with free cash flow of -$4.3B against $872M of revenue. This Applied Digital Corporation stock analysis starts with that risk profile, because it shapes everything else in the numbers.

What Is Happening With the Stock Price

The shares trade at $21.17, against a two-year low of $3.95 and a two-year high of $47.28. That places the stock in the middle of its range: more than five times the low, but about 55% below the high. The market capitalization is $6.40B. A range that wide shows how volatile the shares have been, and a one-day gain of the kind that put the stock at the top of our watchlist can reverse just as quickly.

Quality: Is This a Financially Sound Business?

Quality scores just 23/100. The gross margin of 21.6% is thin, and the operating margin of -18.2% and net profit margin of -53.0% show the business is far from profitable. Earnings per share were -$1.62, with return on assets of -2.0% and return on equity of -13.6%.

The defining figure is cash flow. Free cash flow of -$4.3B over the trailing twelve months is roughly five times revenue, reflecting the heavy capital spending needed to build data-center capacity. That spending has to be funded, and debt-to-equity of 1.71 shows how much has come from borrowing. The EV/Revenue of 13.27 implies an enterprise value well above the $6.40B market capitalization, consistent with substantial net debt. Near-term liquidity is adequate, with a current ratio of 2.56 and a quick ratio of 1.93, but continued cash burn on this scale raises the risk of further borrowing or share issuance that dilutes existing holders. For this Applied Digital Corporation stock analysis, the quality picture is of a capital-hungry build-out that has not yet produced profits.

Growth: Does This Company Have Real Upside?

Growth scores 51/100. Revenue growth is the company’s clear strength: 322.4% over the trailing twelve months and a 122.6% five-year CAGR, as new capacity comes online for AI customers. Earnings growth is N/A because the company is loss-making. The question is whether that revenue can eventually earn an adequate return on the capital being spent. With a 21.6% gross margin and negative operating income, the numbers do not yet show that, and EV/Revenue of 13.27 means investors are already paying a high price for each dollar of sales.

Opportunity: Is Now a Good Time to Enter?

Opportunity scores 17/100. There is no P/E ratio because of the losses, EV/EBITDA is negative at -93.26, the free cash flow yield is -66.9% and price-to-book is 3.92. There is no dividend. The stock’s mid-range position offers no clear signal either way, and with negative earnings and cash flow there is little in the current numbers to anchor a valuation.

Applied Digital Corporation Stock Analysis: The Bottom Line

StreetBriefs’ scoring model rates Applied Digital a Sell, with a Recommendation Score of 30/100. Its Quality score of 23/100 sits below the model’s minimum quality threshold of 25/100, which on its own rules out anything better than Sell. What could go right is real: revenue is growing at an exceptional pace, demand for AI computing capacity remains strong, and the build-out could become far more profitable as facilities mature. The bear case is deep losses, -$4.3B of free cash flow, debt-to-equity of 1.71 and the possibility of further dilution. The main risk is that funding costs or slower demand could leave the company with expensive capacity and insufficient returns.

This Applied Digital Corporation stock analysis presents Sell as a quantitative model signal for further research, not a personalized recommendation to transact. Investors weighing the name might watch whether operating margins turn positive and cash burn narrows. Highly volatile, cash-consuming companies carry above-average risk.