Applied Digital Revenue Surges 84%, Shares Jump 16% After-Hours as AI Data Center Demand Fuels Growth

TradingKey - Applied Digital (APLD.US), which has transformed from a cryptocurrency mining company into an application digital company, reported strong first-quarter earnings that significantly exceeded market expectations, with revenue growth driving its stock price to surge over 16% in after-hours trading.

The earnings report released on Thursday showed that for the quarter ended August 31, Applied Digital achieved revenue of $64.2 million, a substantial 84% increase from the same period last year and significantly higher than the $50 million previously forecast by Wall Street analysts. This growth primarily stems from a surge in demand for its data center services, reflecting that more and more customers are expanding computing capacity to support rapidly developing generative AI applications.

Currently, global enterprises are accelerating the deployment of next-generation AI models, driving massive demand for high-performance data center infrastructure capable of handling intensive computing loads.

It is understood that Applied Digital has successfully completed a key business transformation, evolving from an initial cryptocurrency mining company into a significant competitor in the artificial intelligence infrastructure sector. As a designer, developer, and operator of next-generation digital infrastructure in North America, the company focuses on providing specialized data center solutions and high-performance cloud computing services for cutting-edge applications such as AI, HPC, and blockchain.

Applied Digital has secured an initial $112.5 million from its $5 billion perpetual preferred equity financing tool with Macquarie Asset Management. This funding will be used to construct the company's 400MW AI Factory campus Polaris Forge 1 in Ellendale, North Dakota.

In August of this year, Applied Digital finalized a new lease agreement with CoreWeave (CRWV.US), adding 150MW of power capacity to its North Dakota data center campus Polaris Forge 1. Combined with two initial long-term leases with CoreWeave signed earlier this year, the total lease revenue from these three contracts is expected to reach approximately $11 billion. Of this, the two previously announced 15-year contracts have already contributed a revenue base of $7 billion.

"We feel this third lease validates our platform and execution, positioning Applied Digital as a trusted strategic partner to the world's largest technology companies," said Wes Cummins, Chairman and CEO of Applied Digital.

Meanwhile, its second campus Polaris Forge 2 near Harwood, North Dakota, has broken ground. The campus will initially construct two 150MW buildings, planning to utilize 200MW of power to meet IT load requirements. The company believes that based on future power agreements, the campus could eventually expand to a capacity of 1GW.

Applied Digital revealed that it is currently in advanced negotiations with an investment-grade hyperscale data center operator and has reached agreement on several key lease terms. If the agreement is finalized, the customer will have priority purchase rights to the full 1GW capacity (subject to additional power support).

Company management stated that with long-term leases supporting both campuses, Applied Digital will be well-positioned to lead the next wave of AI infrastructure development, with these multi-year agreements providing significant economies of scale and revenue visibility.

Market institutions generally hold an optimistic outlook on the company's prospects. Citizens JMP Securities raised its target price from $18 to $35, maintaining an "Outperform" rating. Compass Point similarly increased its target price from $13 to $30, maintaining a "Buy" rating, citing reasons including the full leasing of Polaris Forge 1 and the potential for Polaris Forge 2 to attract hyperscale cloud service providers.

According to TradingKey Stock Score, Applied Digital currently has a composite score of 7.48, ranking 8th among 65 fintech and infrastructure companies, placing it at the forefront of the industry.