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Luke Kawa

Applied Digital soars after posting quarterly revenue beat in Q1, touting strong pipeline of data center demand from hyperscalers

Shares of Applied Digital are soaring more than 25% after the company reported better-than-expected results for its fiscal Q1 and said hyperscalers are lining up to secure capacity as it plans a multiyear expansion.

During the conference call with analysts, Chairman and CEO Wes Cummins said that Applied Digital is “in advanced discussions with an investment-grade hyperscaler” to lease capacity at its Polaris Forge 2 campus, which is expected to begin to come online in 2026 and could scale to up to 1 gigawatt. He added that management has “also entered negotiations with two additional hyperscalers for two new locations.”

The data center company, which counts Nvidia and CoreWeave among its major share and warrant holders, booked $64.2 million in revenues (Bloomberg-compiled consensus estimate: $46.1 million) with an adjusted diluted loss per share of $0.03 (estimate: loss of $0.13) for the three-month period ended August 31.

Its big revenue beat was driven by “tenant fit-out” revenue from CoreWeave as Applied Digital began to ready a data center for use by installing power, cooling, networking, and other infrastructure. While CFO Saidal Mohmand said these revenues are a “one-time, low-margin business,” he still expects them to “ramp significantly over the next quarter” and finds it “strategically important” that APLD’s customers can rely on them “for end-to-end services required to deploy state-of-the-art data centers.”

During the conference call, Cummins reiterated his expectation that Applied Digital will reach a run rate of $1 billion of net operating income within five years.

The options-implied move for the stock on earnings was a whopping 17.6%, per Bloomberg data.

Applied Digital is also one of the components in the Roundhill Meme Stock ETF, which relaunched this week.

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Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

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US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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