Company Overview - Applied Digital Corporation operates in the technology infrastructure market, focusing on digital infrastructure for high-demand computing applications, particularly supporting AI and HPC workloads through specialized data centers and cloud services [5] - The company generates revenue through infrastructure services for crypto mining, GPU computing solutions, and the design, construction, and management of data centers, serving enterprise clients in AI, machine learning, and HPC sectors across North America [6] Financial Performance - As of September 30, Applied Digital reported a revenue of $64.2 million for the fiscal third quarter, reflecting an 84.3% year-over-year increase [10] - The company has a market capitalization of $6.34 billion and a total revenue of $219.02 million for the trailing twelve months (TTM), with a net loss of $225.71 million [4] Stock Performance - As of November 13, shares of Applied Digital were priced at $23.06, which is a 221.6% increase over the past year [3] - The stock has gained 231.4% over the last year, significantly outperforming the S&P 500 index's 17.7% return and the Nasdaq Composite's 20% [9] Investment Activity - Hood River Capital Management LLC sold 812,377 shares of Applied Digital during the third quarter, reducing its position by 3.7%, while the remaining stake stands at 21,046,654 shares valued at $482.8 million, representing 5.7% of the fund's assets under management [2][3][9]

Core Insights - Applied Digital and Nebius are two distinct investment options in the growing AI market, with Applied Digital focusing on data center campuses and Nebius providing cloud-based AI infrastructure services [1] - Both stocks have more than tripled in value over the past 12 months, prompting a review of their business models, growth rates, and valuations [2] Applied Digital Overview - Applied Digital initially targeted Bitcoin miners but pivoted to cloud, AI, and HPC markets in 2022, positioning itself more as a real estate company than a tech firm [4] - In 2023, Applied Digital launched a subsidiary, Sai Computing, for cloud-based AI infrastructure services, which grew rapidly but was unprofitable and conflicted with its data center hosting clients [5] - The company plans to spin off Sai's cloud business and merge it with EKSO Bionics Holdings to form a new entity called ChronoScale [5] Financial Performance and Projections - The spin-off of Sai's cloud business may hinder Applied Digital's near-term growth, but its data center hosting business has secured $16 billion in lease payments over the next 15 years, primarily from CoreWeave [6] - Analysts project a 38% revenue increase to $297 million for fiscal 2026, with a narrowed net loss of $91 million, although the company appears expensive at 27 times this year's sales [7] - The long-term potential for generating over $1 billion in annual revenue from leases may justify its current valuation [7] Comparison with Nebius - Nebius provides customized AI infrastructure services across various industries, and it is noted that one of these companies is growing faster and trading at more attractive valuations compared to Applied Digital [8]

Core Insights - Applied Digital (APLD) is restructuring its operations to focus on high-performance compute hosting, supported by long-term leases and a sustainable financing model [1] - The company operates two segments: a legacy Data Center Hosting Business and a High-Performance Compute Hosting Business, with the latter being the main growth driver [1] Segment Developments - At the Polaris Forge 1 campus, the expansion has reached a fully leased capacity of 400 MW with CoreWeave as the sole tenant, with lease revenue expected to start from late 2025 [2] - Polaris Forge 2 is under construction, with an initial capacity of 300 MW expected to be operational by 2026, and a U.S. investment-grade hyperscaler has leased 200 MW [2] Funding and Construction - APLD is utilizing asset-level financing structures to minimize corporate dilution, having drawn $112.5 million from a preferred equity facility and secured $50 million in equipment financing [3] - The company has 700 MW under construction across its campuses, with a targeted build cycle of 12 to 14 months [3] Revenue Transition - Current revenues are primarily from low-margin tenant fit-outs, but as facilities become operational, revenue will shift to multi-year lease agreements, enhancing earnings visibility [4] - APLD anticipates approximately $11 billion in contracted lease revenues from Polaris Forge 1 and about $5 billion from Polaris Forge 2 over 15 years [5] Financial Projections - The Zacks Consensus Estimate for fiscal 2026 revenues is $280.9 million, indicating a 30.4% growth from fiscal 2025, with an expected loss of 31 cents per share [6] - APLD's stock has increased by 187.1% over the past year, significantly outperforming the broader Zacks Finance sector [7] Competitive Landscape - APLD faces competition from major data center operators like Equinix, emphasizing the need for speed and innovative cooling designs in AI-focused infrastructure [8] - The company is transitioning from low-margin fit-outs to multi-year leases, with a total of $16 billion in leases across its Polaris Forge campuses [8]

Core Insights - Applied Digital stock is expected to rise significantly following the release of its upcoming quarterly report, having already seen a remarkable 215% increase in 2025 due to high demand for AI infrastructure [1][3] - The company is positioned in the AI infrastructure boom, focusing on designing and operating data centers for high-performance computing and AI workloads, leading to rapid revenue growth [2] Financial Performance - Applied Digital has consistently outperformed Wall Street's earnings expectations, reporting smaller losses than anticipated, driven by strong revenue growth [5] - In the first quarter of fiscal 2026, revenue increased by 84% year-over-year to $64 million, surpassing the $50 million consensus estimate, aided by a significant contract with CoreWeave [6] - The company has completed the fit-out of 100 megawatts (MW) of HPC hosting capacity for CoreWeave, with a 15-year lease contract expected to contribute $11 billion to revenue over its lifetime [7] Future Projections - Analysts forecast a 29% year-over-year revenue increase to $82.2 million for the recently concluded fiscal Q2, with expectations that Applied Digital will exceed these estimates [9] - The stock is currently trading at a high valuation of nearly 33 times sales, but the company's growth potential and revenue pipeline justify this valuation [10] - If Applied Digital achieves the projected $970 million revenue in the coming years and trades at a discounted 10 times sales, its market cap could increase by 44% to $9.7 billion [12] Investment Consideration - The current pullback in stock price presents a potential buying opportunity, as the company is poised for significant growth following its upcoming results [13]

Group 1 - Applied Digital Corp. (NASDAQ: APLD) experienced a significant increase of 16.88% week-on-week as investors anticipated its second-quarter fiscal year 2026 earnings results [1] - The company is set to release its financial and operational highlights after market close on January 7, with a conference call planned to discuss the results [2] - Applied Digital has initiated a restructuring process, creating two separate entities for its cloud computing and data center businesses [3] Group 2 - The restructuring strategy includes a merger with EKSO Bionics Holdings Inc., which will be renamed ChronoScale, focusing on an accelerated compute platform for AI workloads [4] - Following the merger, Applied Digital will own 97% of the combined firm, while EKSO Bionics will seek potential buyers for its business and assets [4] - The proposed transaction aims to establish a focused platform to meet the growing demand for GPU-accelerated cloud infrastructure in a capacity-constrained market [5]

Geopolitical Developments - The U.S. launched a military strike on Venezuela, extracting President Nicolás Maduro to face criminal charges in the U.S. [2] - President Trump stated that the U.S. would "run" Venezuela until an orderly transition is possible and that U.S. oil companies would rebuild Venezuela's oil infrastructure [2][3] Market Reactions - Investors are expected to closely monitor developments in Venezuela and seek more details from the Trump administration, particularly regarding the oil market, which may experience volatility [3] Employment and Economic Data - The Bureau of Labor Statistics is set to release the December jobs report, which could influence interest rates [6] - Federal Reserve officials indicated that a weakening labor market might lead to more interest rate cuts, with upcoming reports on job openings, private sector hiring, and jobless claims providing insights into the labor market [7] Corporate Earnings Reports - Applied Digital, a data center operator, will report on the AI industry, with investors looking for signals of strong AI spending [9] - Constellation Brands, Tilray Brands, Albertsons Companies, CalMaine Foods, and Simply Good Foods are among the companies reporting earnings this week, providing insights into consumer spending levels [10][11]

Core Viewpoint - The stock of Applied Digital has significantly benefited from the ongoing investment cycle in AI data centers, showcasing remarkable growth and potential for future revenue increases [1][2]. Group 1: Company Overview - Applied Digital specializes in designing, building, and operating high-performance data centers that cater to heavy GPU workloads [4]. - The company initially focused on blockchain applications but pivoted to AI workloads in 2023, leading to substantial revenue growth [5]. Group 2: Financial Performance - Since the beginning of 2023, Applied Digital's stock has surged by 1,200%, with analysts projecting revenues of $552 million in 2026, an 86% increase from the estimated $297 million in 2025 [2][8]. - The company is currently experiencing a boom in data center spending, with total data center capacity demand expected to increase by nearly 300% by 2030 [7]. Group 3: Capital Expenditures and Debt - Applied Digital is heavily investing in building data centers, leading to significant capital expenditures and an increase in long-term debt, which currently stands at approximately $700 million [11]. - The company has increased its share count by 196% over the past three years, raising concerns about share dilution and the sustainability of its financial model [11]. Group 4: Market Position and Valuation - The current market capitalization of Applied Digital is approximately $7.9 billion, with a price-to-sales ratio nearing 13 times the 2026 revenue estimates, indicating a potentially high valuation relative to its revenue growth [12][13]. - The company is currently incurring cash losses, which raises questions about its long-term profitability and the feasibility of its growth strategy [14].

Economic Data Release - The week will begin with ISM Manufacturing PMI and ISM Manufacturing Prices data for December on Monday [2] - S&P Global Services PMI and ISM Non-Manufacturing PMI for December will be released on Tuesday [2] - JOLTS Job Openings for November and ADP Nonfarm Employment numbers for December are scheduled for Wednesday [2] - Initial Jobless Claims data will be released on Thursday [2] - Nonfarm Payrolls and unemployment numbers for December are due on Friday [2] Earnings Reports - Constellation Brands, Marks & Spencer, Albertsons, and Applied Digital will report their earnings on Wednesday [3][4] - Tesco PLC is set to report earnings on Thursday [4] Market Events - The CES conference in Las Vegas will focus on AI, robotics, digital health, and mobility, featuring keynote speeches from Nvidia CEO Jensen Huang [5] - IREN Limited and GameStop are expected to experience volatility based on options volume [4] - The analyst quiet period will expire for Lumexa, Wealthfront, JM Group, and Cardinal Infrastructure, allowing analysts to post ratings [4]

Core Insights - Applied Digital Corporation (NASDAQ: APLD) is recognized as one of the best AI stocks to buy under $50, focusing on next-generation digital infrastructure for HPC and AI workloads [1] - The company has entered into a loan facility with Macquarie Group to fund pre-lease development costs for new data center projects [1][2] - APLD is in advanced negotiations with an investment-grade hyperscaler for multiple campuses and plans to draw an initial $100 million from the loan facility [2] - The financing is aimed at supporting the development of purpose-built campuses for hyperscale customers as demand for AI-optimized data center infrastructure grows [3] - APLD plans to spin off Applied Digital Cloud through a merger with EKSO Bionics Holdings Inc., creating a new company called ChronoScale focused on AI workloads [4] - Analysts have a consensus Buy rating on APLD, with an average price target of $40.50, indicating a potential upside of 68.40%, and a Street-high target of $56, suggesting an upside of 132.85% [5]

Core Insights - Applied Digital Corporation (NASDAQ: APLD) has seen a significant stock price increase of 14.64% to close at $28.11, driven by renewed investor interest in artificial intelligence despite the absence of new catalysts [1] - The company successfully spun off its cloud computing and data center businesses to focus on its core strengths [1] Group 1 - The merger with EKSO Bionics Holdings Inc. aims to create a focused platform for AI workloads, with Applied Digital owning 97% of the combined firm [2] - EKSO Bionics will seek potential buyers for its business and assets as part of the merger [2] - The transaction is designed to meet the growing demand for GPU-accelerated cloud infrastructure in a capacity-constrained market [2]