Applied Digital Shares Surge on Bright Outlook. Is It Too Late to Buy the Stock?

Core Insights - Applied Digital has experienced significant stock performance, with shares increasing approximately 250% over the past year, driven by strong revenue growth and advanced discussions with hyperscalers for data center capacity [1][2][8] Company Overview - Applied Digital operates as a specialized real estate company focused on AI infrastructure, recently announcing a spin-off of its cloud computing business to merge with EKSO Bionics, forming a new entity called ChronoScale [3] - The company builds and operates data centers specifically designed for AI workloads, leveraging its historical experience in Bitcoin mining to secure access to low-cost power [4] Financial Performance - In fiscal Q2, Applied Digital reported a revenue increase of 250% to $126.6 million, with the high-performance computing (HPC) segment contributing $85 million, primarily from tenant fit-out services [5] - The data center hosting business saw a 15% revenue growth to $41.6 million, with an operating income of $16 million [6] - Adjusted net income was reported at $0.1 million, with adjusted EBITDA rising to $20.2 million from $6.1 million year-over-year [7] Growth Prospects - The company is in advanced discussions for 900 megawatts of power across multiple sites, which is expected to drive future growth [8] - Current HPC capacity is at 100 megawatts, with plans to expand to 400 megawatts for CoreWeave by the end of 2027, and an additional 200 megawatts commitment from another customer [9] - Financing is in place for these projects, which are anticipated to yield significant growth if returns and operating leverage are demonstrated [10]