Core Viewpoint - Applied Digital (APLD.US) reported significant financial growth, indicating strong potential in the AI infrastructure sector, which is experiencing rapid capital expenditure growth from large enterprises [1] Financial Performance - For the second quarter of fiscal year 2026, Applied Digital reported revenue of $126.6 million, a year-over-year increase of 250% [1] - The company reported a basic and diluted net loss per share of $0.11, which represents an 82% reduction compared to the previous year [1] - Adjusted net profit was $100,000 for the quarter [1] Market Position and Strategy - Management highlighted that AI infrastructure represents a once-in-a-generation investment opportunity, with capital expenditures from large enterprises exceeding $400 billion annually and growing rapidly [1] - Applied Digital has strategically invested early in customized next-generation data centers, positioning itself favorably in the market [1] - The company anticipates achieving over $1 billion in net operating income (NOI) within the next five years [1]

Core Insights - The data-center operator is in discussions to finalize a lease with an unnamed client by the start of the year [1] Company Summary - The company is actively pursuing new leasing opportunities to enhance its operational capacity [1]

Core Insights - Applied Digital's stock rose by 7% in premarket trading following a strong second-quarter revenue report that exceeded Wall Street expectations, driven by demand for AI-related infrastructure [1] Revenue Performance - The company reported fiscal second-quarter revenue of $126.6 million, significantly surpassing analysts' expectations of approximately $88 million, and up from $36.16 million in the same period last year, indicating rapid growth due to increased demand for AI training and deployment [2] - Applied Digital posted a net loss of $19.1 million, or 7 cents per share, a notable improvement from a loss of $139.4 million, or 66 cents per share, in the prior-year quarter, with adjusted earnings breaking even compared to analyst forecasts of a 16 cents loss [3] Long-term Leasing Agreements - Growth is supported by long-term leasing agreements with hyperscalers, including a recent $5 billion lease for 200 megawatts of capacity at the Polaris Forge 2 campus in North Dakota, with existing leases expected to generate approximately $16 billion in revenue over their terms [4][5] - The strategic advantages of the region, such as a cool climate and abundant energy supply, position Applied Digital as a competitive provider for hyperscale customers [5] Future Outlook - Based on current and anticipated lease activity, the company expects to exceed its $1 billion net operating income target within the next five years, supported by projections for additional hyperscaler customers [6] Corporate Restructuring - Applied Digital is restructuring its corporate framework to focus on becoming a data center-focused real estate investment trust, planning to spin off its cloud services business and merge it with Ekso Bionics to create a new AI-focused entity called ChronoScale, retaining a 97% ownership stake [8][9]

Group 1 - Applied Digital Corp. (NASDAQ:APLD) is considered a strong buy stock, with Northland reiterating an Outperform rating and setting a $40 price target for 2026, indicating a strategic position to outperform peers next year [1] - The company announced a non-binding term sheet for a proposed business combination with EKSO Bionics Holdings, aiming to create ChronoScale Corporation, a platform focused on AI workloads [2] - The separation of the accelerated compute platform from its data center business will allow for independent scaling and increased operational flexibility [3] Group 2 - Applied Digital Corp. operates in the technology sector, providing data center development and operations, divided into Data Center Hosting and HPC Hosting Business segments [4]

Market Overview - Major U.S. stock indexes finished mixed, with the Dow Jones Industrial Average down 0.9% to 48,996.08, S&P 500 down 0.3%, and Nasdaq up 0.16% to 23,584.27 [1] Applied Digital Corp. - Applied Digital shares fell 2.33% to close at $29.56, with an intraday high of $31.45 and a low of $29.52; after-hours trading saw a rise of 3.69% to $30.65 [2] - The company reported second-quarter results that exceeded expectations, achieving break-even EPS compared to a projected loss of 10 cents, and revenue of $126.6 million, up from $36.2 million year-over-year [2][3] Innovative Eyewear - Innovative Eyewear's stock surged 47.46% to close at $1.74, with a high of $2 and a low of $1.59; it fell 6.25% to $1.63 in after-hours trading [3] - The company reported preliminary unaudited fourth-quarter 2025 sales of about $1 million, a 45% year-over-year increase, with full-year 2025 revenue estimated at $2.7 million, a 65% increase from 2024 [4] - Innovative Eyewear holds approximately 44% of Amazon's smart safety glasses market, and its executives plan open-market share purchases, indicating confidence in growth [4] RTX Corporation - RTX Corporation's stock ended down 2.45% at $185.73, with a high of $193.79 and a low of $185.61; it gained 3.2% to $191.69 in after-hours trading [5] - The company secured a $438 million contract from the FAA for next-generation air traffic radars, aimed at enhancing the U.S. National Airspace System [5][6] Northrop Grumman Corp. - Northrop Grumman's stock declined 5.5% to close at $577.01, with an intraday high of $617.99 and a low of $574.51; it gained 5.5% to $608.90 in after-hours trading [7] - The decline followed criticism from President Donald Trump regarding defense contractors, but he proposed $1.5 trillion in defense spending for 2027, which positively impacted defense stocks [8] Intel Corp. - Intel's stock rose 6.52% to close at $42.63, with an intraday high of $44.57 and a low of $40.12; the stock's 52-week range is $17.66 to $44.57 [9] - The increase was driven by Intel's announcement of entering the handheld gaming market with a new processor and platform, aiming to capture a share of the growing gaming industry [9]

Core Insights - The company announced significant lease agreements in North Dakota, totaling 600 megawatts of capacity and approximately $16 billion in prospective lease revenue [1][7] - A 15-year lease with a U.S.-based investment-grade hyperscaler for 200 megawatts at Polaris Forge Two is valued at around $5 billion, with the project expected to be operational by 2026 [1] - Polaris Forge One is projected to host 400 megawatts for CoreWeave, representing about $11 billion in lease revenue over 15 years, with completion expected by the end of 2027 [2][7] Financial Performance - Fiscal Q2 revenue reached $126.6 million, a 250% increase year-over-year, driven by turnkey fit-out services and partial lease recognition [6][19] - Cash-basis lease revenues were approximately $8 million, with adjusted EBITDA reported at $20.2 million and a GAAP net loss of $31.2 million [6][13] - Cost of revenues increased to $100.6 million, attributed mainly to tenant fit-out services, while SG&A expenses rose to $57 million due to stock-based compensation and higher personnel costs [12] Financing and Capital Structure - The company established a financing framework, drawing $900 million from a preferred equity facility and issuing $2.35 billion in secured notes to support campus builds [5][15] - As of the end of the quarter, the company had $2.3 billion in cash and cash equivalents against $2.6 billion in debt, with plans to refinance at lower rates once buildings are operational [17][16] Market Demand and Growth Prospects - Inbound demand for leases has increased significantly following the recent agreements, with advanced discussions on additional sites totaling approximately 900 megawatts [8][9] - The company is focused on scaling construction execution across multiple sites, emphasizing execution and supply chain as key constraints [9] Strategic Initiatives - The company plans to spin out its cloud business into Chronoscale, expected to close in H1 2026, allowing for independent scaling of the cloud platform and data center business [20] - Initiatives are underway to enhance power and cooling solutions for high-density AI infrastructure, including partnerships for advanced cooling technologies [21]

Financial Data and Key Metrics Changes - Revenues for the fiscal second quarter of 2026 were $126.6 million, up 250% from $36.2 million in the prior year [12] - Adjusted EBITDA for the quarter totaled $20.2 million [15] - Net loss was $31.2 million, or $0.11 per share, while adjusted net income was positive $100,000 or $0 per share [15] Business Line Data and Key Metrics Changes - The data center hosting segment generated $41.6 million of revenue, up 15% compared to the prior year, driven by increased capacity online [13] - Turnkey fit-out services associated with the HPC hosting business contributed $73 million to revenue [12] Market Data and Key Metrics Changes - The company has secured two hyperscale leases in North Dakota, representing 600 megawatts of lease capacity and approximately $16 billion in prospective lease revenue [6][10] - Inbound demand for data center capacity has increased significantly due to competition among hyperscalers [6] Company Strategy and Development Direction - The company aims to surpass its long-term goal of $1 billion in NOI within five years, leveraging low-cost energy and a supportive regulatory environment in the Dakotas [17] - A non-binding letter of intent has been entered to combine Applied Digital Cloud with Exo to form Chronoscale, allowing each business to scale independently [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the contracting environment has become more favorable over the past six months, with stable to slightly better pricing [31] - The company is in advanced discussions for three additional sites representing 900 megawatts, indicating a robust pipeline [48] Other Important Information - The company completed a $2.35 billion private offering of senior secured notes to finance the first two buildings at Polaris Forge One [12] - The company ended the quarter with $2.3 billion in cash and cash equivalents, positioning it well for future investments [15] Q&A Session Summary Question: Growth appetite in the cloud business and future GPU purchases - Management highlighted the advantage of having access to large-scale data center facilities for Chronoscale, which will help attract customers [22][23] Question: Landscape for leases and pricing changes - Management indicated that pricing has been stable to slightly better, with more favorable terms in contracts [30][31] Question: Expansion opportunities at PF1 and PF2 - Management confirmed that each campus has the potential to reach at least a gigawatt, with a clear path to grow capacity significantly [72][75]

Financial Data and Key Metrics Changes - Revenues for the fiscal second quarter of 2026 were $126.6 million, up 250% from $36.2 million in the prior year [12] - Adjusted EBITDA for the quarter totaled $20.2 million [15] - Net loss was $31.2 million, or $0.11 per share, while adjusted net income was positive $100,000 or $0 per share [15] Business Line Data and Key Metrics Changes - The data center hosting segment generated $41.6 million of revenue, up 15% compared to the prior year, driven by increased capacity online [13] - Turnkey fit-out services associated with the HPC hosting business contributed $73 million to revenue [12] Market Data and Key Metrics Changes - The company has secured two hyperscale leases in North Dakota, representing 600 MW of lease capacity and approximately $16 billion in prospective lease revenue [6] - Inbound demand has increased significantly, with advanced discussions ongoing with another investment-grade hyperscaler across multiple regions [6] Company Strategy and Development Direction - The company aims to surpass its long-term goal of $1 billion in NOI within five years, leveraging low-cost energy and a supportive regulatory environment in the Dakotas [17] - A non-binding letter of intent has been entered to combine Applied Digital Cloud with Exo to form Chronoscale, allowing each to scale independently [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the contracting environment has become more favorable over the past six months, with stable to slightly better pricing and improved contract terms [31] - The company is focused on scaling construction across multiple sites and ensuring timely delivery to customers [49] Other Important Information - The company ended the second fiscal quarter with $2.3 billion in cash and cash equivalents, compared to $2.6 billion in debt [15] - The company is exploring ways to add power to the grid without increasing costs to customers, reinforcing its leadership in data center design [18] Q&A Session Summary Question: Growth appetite in the cloud business and future GPU purchases - Management highlighted the advantage of having access to large-scale data center facilities for deploying accelerated compute, which will benefit the cloud business as it spins out [22][23] Question: Landscape for leases and pricing changes - Management indicated that pricing has been stable to slightly better, with more favorable terms in contracts [30][31] Question: Advanced discussions on new sites - Management confirmed advanced discussions on three sites totaling 900 MW [46][47] Question: Expansion opportunities at PF1 and PF2 - Management stated that each campus has the potential to scale to at least a gigawatt, with a clear path to grow capacity to 5 GW by 2030 or 2031 [72][75]

Financial Data and Key Metrics Changes - Revenues for the fiscal second quarter of 2026 were $126.6 million, up 250% from $36.2 million in the prior year [12] - Adjusted EBITDA for the quarter totaled $20.2 million [16] - Net loss was $31.2 million, or $0.11 per share, while adjusted net income was positive $100,000 or $0 per share [16] Business Line Data and Key Metrics Changes - The HPC hosting business generated $73 million in revenue from turnkey fit-out services, and $12 million from the first CoreWeave lease at Polaris Forge One [13] - The data center hosting segment contributed $41.6 million in revenue, up 15% compared to the prior year, driven by increased capacity online [14] Market Data and Key Metrics Changes - The company has secured two hyperscale leases in North Dakota, representing 600 megawatts of lease capacity and approximately $16 billion in prospective lease revenue [5] - Inbound demand has increased significantly, with advanced discussions ongoing with another investment-grade hyperscaler across multiple regions [5] Company Strategy and Development Direction - The company aims to maintain a competitive advantage in the Dakotas due to low-cost energy and ample land for expansion [7] - Plans to spin out Applied Digital Cloud to form Chronoscale, a dedicated GPU-accelerated compute platform, allowing each business to scale independently [20] - The company is committed to responsible development and community partnerships, investing in initiatives that support local development [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in surpassing the long-term goal of $1 billion in NOI within five years, driven by robust hyperscaler investment exceeding $400 billion annually [18] - The company is focused on maintaining a strong balance sheet and liquidity position to support future investments [16] Other Important Information - The company completed a $2.35 billion private offering of senior secured notes to finance the Polaris Forge One site [12] - The company has a multi-layered financing framework that allows leveraging third-party capital while retaining majority ownership of each site [11] Q&A Session Summary Question: Growth appetite in the cloud business and Chronoscale's future - Management highlighted the advantage of having access to large-scale data center facilities for Chronoscale, which will help attract customers [24] Question: Landscape for leases and pricing changes - Management noted that lease pricing has been stable to slightly better over the past six months, with more favorable contract terms being secured [31] Question: Expansion opportunities at PF1 and PF2 - Management confirmed that each campus has the potential to scale to at least a gigawatt, with a clear path to grow capacity to 5 gigawatts by 2030 or 2031 [72]

Core Insights - Applied Digital reported second-quarter revenue that exceeded Wall Street estimates, driven by strong demand for its large-scale facilities for artificial intelligence [1] Company Summary - The company operates data centers and has seen a significant increase in demand for its services, particularly in the artificial intelligence sector [1] Industry Summary - The data center industry is experiencing robust growth, largely fueled by the rising need for infrastructure to support artificial intelligence applications [1]