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Applied DigitalAPLD +6.04%48 Gross Margin % is 15.66% as of May. 2026, which is 34% below its 10-year median of 23.86. GuruFocus rates APLD with a GF Score™ of 48/100 and a GF Value™ of $20.42 (Significantly Overvalued). The stock has 6 warning signs investors should review. Among 2,690 Software companies, Applied Digital ranks worse than 76.06% on this metric.
Applied Digital (NAS:APLD) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Applied Digital had a gross margin of 15.66% for the quarter that ended in May. 2026 => No sustainable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Applied Digital Gross Margin % Related Terms
Applied Digital Gross Margin % Historical Data
* Premium members only.
The historical data trend for Applied Digital's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Information Technology Services subindustry, Applied Digital's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Applied Digital Gross Margin % vs Software Industry
For the Software industry and Technology sector, Applied Digital's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Applied Digital's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Applied Digital (APLD) has a Gross Margin % of 15.66% as of May. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Applied Digital and its competitors. This is 34% below median its historical median of 23.86. According to the industry distribution chart, Applied Digital ranks #2046 out of 2690 companies in the Software industry, placing it in the top 76.1%.
Is Applied Digital's Gross Margin % too high?
Applied Digital's current Gross Margin % of 15.66% is 34% below median its 10-year median of 23.86. The Software industry median Gross Margin % is 40.58. Applied Digital's value of 15.66% is 61.4% below this industry median. Based on the distribution chart, Applied Digital ranks #2046 out of 2690 companies in the Software industry, which is in the bottom quartile relative to peers. Overall, Applied Digital has a GF Score™ of 48/100 and is considered Significantly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Applied Digital's Gross Margin % compare to INGM and GDS?
According to the Software industry distribution chart, Applied Digital ranks #2046 out of 2690 companies for Gross Margin %. This places Applied Digital in the lower half of its industry. The industry median Gross Margin % is 40.58. Applied Digital's value of 15.66% is 61.4% below this benchmark. While the company's 10-year median is 23.86 vs. the industry median of 40.58, Applied Digital has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.58, based on 2,690 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Applied Digital's current Gross Margin % of 15.66% is 61.4% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Applied Digital and its competitors. For the Software industry, the median Gross Margin % is 40.58 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Applied Digital's current Gross Margin % is 15.66%, which is 34% below median its own 10-year median of 23.86. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Applied Digital stock overvalued right now?
Based on GuruFocus' analysis, Applied Digital (APLD) is currently considered Significantly Overvalued. The stock's GF Value™ is $20.42, compared to a current price of $31.27 — trading 53.1% above its estimated fair value. The current Gross Margin % is 15.66%, which is 34% below median its 10-year median of 23.86 and 61.4% below the Software industry median of 40.58. Applied Digital's overall GF Score™ is 48/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Applied Digital (APLD), the current Gross Margin % is 15.66% as of May. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Applied Digital (APLD) Overvalued in 2026?
Based on GuruFocus' analysis, Applied Digital stock appears to be overvalued.
The current stock price of $31.27 is trading 53.1% above its estimated GF Value™ of $20.42.
GuruFocus considers Applied Digital to be Significantly Overvalued.
Key valuation signals for APLD:
Gross Margin %: 15.66% (34% below median its 10-year median of 23.86)
GF Value™: $20.42 vs. price of $31.27 (53.1% above fair value)
Industry Position: 61.4% below the Software median (#2046 of 2690)
No single metric tells the full story. See the APLD stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Applied Digital Corp is a designer, developer, and operator of next-generation digital infrastructure across North America. It provides digital infrastructure solutions and cloud services to industries like High-Performance Computing (HPC) and Artificial Intelligence (AI). The company operates in the following business segments: Data Center Hosting Business and HPC Hosting Business. The majority of its revenue is generated from the Data Center Hosting Business, which operates data centers to provide energized space to crypto mining customers.
48GF Score
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