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.