Applied Digital (NASDAQ: APLD), currently trading near $26, sits roughly 47% below its twelve-month high after delivering a three-month return of -36.3%.
Despite the sharp decline, the stock remains up 55.6% over the past twelve months, a reminder that even battered shares can carry substantial gains beneath the surface.
The disconnect between price and performance is stark: the company beat its most recently reported quarter in July 2026, with management stating every project remains on time and on budget.
Revenue for the three months ending May 31, 2026 reached $258.7 million, a 407% increase from the same period a year earlier, exceeding analyst expectations on adjusted earnings.
On a reported basis, however, the quarter still produced a net loss of $111.6 million, driven by one-time charges and performance stock compensation costs.
The pricing of newly signed contracts has drawn investor scrutiny, with questions arising over whether Applied Digital locked in yields below what peers typically achieve for deals of similar scale.
The company signed three campuses in four months, including Polaris Forge 3 and Delta Forge 2, all three contracted to a single investment-grade hyperscaler, pushing total contracted lease value to approximately $36 billion on agreements management says run at least 15 years.
Management countered concerns by stating its lease rates fall within the middle to higher end of the market band for deals of that size, and that pricing has increased since those contracts were finalized.
Applied Digital is now marketing an additional 1.7 gigawatts of capacity, which management expects will price at higher rates than previously contracted campuses.
Revenue over the trailing twelve months is up 229.2%, against a three-year average growth rate of 144.6%, indicating that growth is actually accelerating rather than slowing.
The operating margin stands at -35.1%, still negative but improved from a three-year average of -40.7%, though it has previously reached as low as -21.7% at its best point.
One year ago, Applied Digital operated a single campus with $7 billion in contracted lease value; it now operates five campuses, with management identifying power availability and supply chain capacity as the primary constraints on further expansion.
The company funds its construction pipeline with debt, ending the quarter to July 27, 2026 with $5 billion in debt outstanding against $4.2 billion in cash on hand.
Historical data across 14 catalogued market shocks shows Applied Digital falling an average of 46% peak to trough while the S&P 500 declined 16% over those same periods.
During the 2023 yield shock specifically, the stock fell 62% while the broader index dropped only 9.5%, illustrating just how severe the drawdowns can become during risk-off environments.
Among the pullbacks it has recovered from, the median time from trough back to the prior high has been approximately seven months, with the 2023 yield shock requiring roughly twelve months to fully recover.
The central question facing investors now is whether a company operating five campuses under construction will experience the same magnitude of drawdowns as it did when it was a single-campus operation.
