Why Applied Digital Stock Popped Today
Key Points
Applied Digital's revenue is skyrocketing.
Management sees a long runway for expansion ahead.
Shares of Applied Digital (NASDAQ: APLD) rose on Thursday after the digital infrastructure builder announced impressive quarterly growth metrics.
By the close of trading, Applied Digital's stock price was up more than 8% after rising as much as 20% earlier in the day.
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Fueling the AI revolution
Applied Digital's revenue soared 250% year over year to $126.6 million in its fiscal 2026 second quarter, which ended on Nov. 30.
The data center operator fully energized the first building at its Polaris Forge 1 campus in North Dakota. In turn, Applied Digital's high-performance computing (HPC) hosting business generated $85 million in revenue from its major client, artificial intelligence (AI)-focused cloud services provider CoreWeave, during the quarter.
Additionally, Applied Digital's legacy data center hosting business, which primarily serves cryptocurrency mining customers, saw its revenue rise by 15% to $41.6 million.
These revenue gains helped Applied Digital's net loss from continuing operations shrink by 76% to $31.2 million.
Moreover, the company's adjusted net income, which excludes stock-based compensation and restructuring charges, was slightly positive at $0.1 million, essentially breaking even on a per-share basis at $0.00. That was significantly better than Wall Street's estimates, which had called for an adjusted per-share loss of $0.21, according to Yahoo! Finance.
Management sees a path to over $1 billion in operating profits
With cloud computing companies projected to invest over $400 billion annually in AI infrastructure, Applied Digital should continue to enjoy robust demand for its next-gen data centers.
The AI infrastructure specialist expects to win more business from new customers while its current clients expand within its existing campuses. In turn, management is now forecasting net operating income of more than $1 billion within the next five years.
Joe Tenebruso 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.