Up Nearly 300% Since 2025, Is Applied Digital Stock a Buy?

Applied Digital (NASDAQ: APLD) has been one of the best stock picks over the past year. It has risen nearly 300% since 2025 began, but it has sharply sold off over the past few weeks. Now, it's down nearly 30% from its all-time high established in January.

Applied Digital has been a great stock to own over the past few months, but is now the time to buy? I think it could easily bounce back, especially once the market gets its appetite for artificial intelligence (AI) investing back.

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AI is becoming out of favor

Over the past few weeks, investors have really honed in on AI spending. They want to see a return on investment for all of the massive amount of capital being deployed to build out AI computing capacity. However, the reality is that a lot of that value is still being created and may take years to show up. Eventually, investors will get back on the AI bandwagon, and Applied Digital could be one of the stocks that skyrockets once that happens.

Applied Digital is focused on building data centers in ideal locations that it rents out to various AI firms. It has several data centers already under construction and computing power available at a handful of sites. While it is generating solid revenue right now, the reality is that Applied Digital is a future growth story.

During Q2 of fiscal year (FY) 2026 (ending Nov. 30, 2025), Applied Digital's revenue rose an impressive 250% year over year to $127 million. However, it posted a net loss of $31 million. That's because it's spending all of its resources to get its data centers up and running to capture market share that will print money for several decades.

This is a smart strategy, and it will likely pay off in the end. But investors must be patient with the stock, as the market is often shortsighted compared to the long-term mindset you need to invest in a company like Applied Digital.

If you value it using traditional valuation metrics like the price-to-sales ratio, it looks way overpriced at 26 times sales.

APLD PS Ratio data by YCharts

Wall Street analysts expect 61% revenue growth for the remainder of FY 2026 and 55% in FY 2027, so this valuation measure will come down, but it will take some time to do so.

If you're bullish on the AI buildout and expect it to last for several years, Applied Digital could be a great buy right now. However, you'll have to be patient and deal with the ups and downs of the market, as it will take some time before Applied Digital's plans are fully accomplished.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.