Applied Digital Jumps After Earnings Beat, Hyperscaler Talks

Latest earnings highlighted accelerating AI infrastructure demand and expanding hyperscaler relationships.

Applied Digital (APLD) shares moved sharply higher after the company reported fiscal second-quarter results that exceeded expectations and revealed advanced discussions with a large cloud provider for significant new data center capacity.

Key Points

• Revenue surged as AI-related hosting activity ramped across new data center sites
• Adjusted earnings broke even, beating expectations for a quarterly loss
• Management outlined long-term visibility tied to hyperscaler demand and large-scale power commitments

Revenue Growth Driven by AI Infrastructure

Applied Digital reported fiscal second-quarter revenue of $126.6 million, representing year-over-year growth of roughly 250%. The increase was driven primarily by high-performance computing hosting activity tied to artificial intelligence workloads.

The company’s HPC hosting business generated $85 million in revenue during the quarter, largely from tenant fit-out services and early lease revenues at its Polaris Forge 1 campus in North Dakota. Its legacy data center hosting business, which primarily serves cryptocurrency mining customers, also posted growth, with revenue rising 15% to $41.6 million.

What Stood Out in the Earnings Report?

Adjusted earnings came in at breakeven, or $0.00 per share, well ahead of expectations for a quarterly loss. The company’s net loss from continuing operations narrowed significantly from the prior year as revenue scaled faster than operating costs.

Management also disclosed that it is in advanced talks with an investment-grade hyperscaler regarding approximately 900 megawatts of power capacity across three sites. While no lease has been finalized, the company indicated that a potential agreement could begin forming in early 2026.

How Large Is Applied Digital’s Expansion Pipeline?

Applied Digital said it expects to surpass $1 billion in net operating income within five years, supported by a projected threefold increase in revenue. The company currently has hundreds of megawatts under construction and expects additional campuses to come online across 2026 and 2027.

Management emphasized its competitive positioning in the Dakotas, where access to power and land supports large-scale data center development, and indicated plans to announce additional locations in other regions.

What It Means for Investors

The earnings report reinforced Applied Digital’s role as a leveraged beneficiary of rising AI infrastructure demand. Revenue growth was driven not by short-term price changes, but by physical capacity expansion and hyperscaler-driven workloads, which tend to be long-duration in nature.

At the same time, the company’s balance sheet reflects heavy investment. Debt increased significantly during the quarter as Applied Digital funded construction and expansion projects, underscoring the capital-intensive nature of large-scale data center development.

For investors, the key focus remains execution: converting announced power capacity and customer discussions into signed leases, while managing financing costs as new facilities transition from construction to revenue-generating operations.

Conclusion

Applied Digital’s latest quarter highlighted the scale of demand emerging in AI-focused data center infrastructure. With revenue accelerating, losses narrowing, and hyperscaler discussions advancing, investor attention is likely to remain centered on how quickly capacity can be deployed and monetized.

FAQs

Why did Applied Digital stock rise after earnings?
Applied Digital shares rose after revenue surged, adjusted earnings beat expectations, and management disclosed advanced talks with a hyperscaler for new data center capacity.

What is driving Applied Digital’s revenue growth?
Revenue growth is being driven primarily by high-performance computing hosting tied to artificial intelligence workloads at newly energized data center sites.

What are hyperscaler talks, and why do they matter?
Hyperscalers are large cloud service providers. Securing leases with them provides long-term revenue visibility due to the scale and duration of their infrastructure needs.

Is Applied Digital profitable yet?
Applied Digital reported breakeven adjusted earnings in the quarter, an improvement from prior losses, though the company is still investing heavily in expansion.

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