The artificial intelligence (AI) revolution promises to reshape the global economy in unprecedented ways. Recent research from McKinsey & Co suggests generative AI could add between $2.6 trillion and $4.4 trillion in annual value across 63 analyzed use cases.
Applied Digital reported Q2 FY25 earnings after market hours yesterday. Going into this, I had a bullish view. But the lack of developments in signing a customer activates a key risk. APLD has been unable to close a customer for its 100MW data center in Ellendale for more than a year now. This reduces my confidence in management's execution ability. I note that Q2 FY25 EBIT profitability is skewed upward due to changes in D&A useful life assumptions.
Applied Digital Corporation (NASDAQ:APLD ) Q2 2025 Results Conference Call January 14, 2025 5:00 PM ET Company Participants Matt Glover - IR, Gateway Group, Inc. Wes Cummins - CEO Saidal Mohmand - CFO Conference Call Participants Nick Giles - B. Riley Securities Rob Brown - Lake Street Capital Darren Aftahi - ROTH Capital Partners Mike Grondahl - Northland Securities George Sutton - Craig-Hallum Brett Knoblauch - Cantor Fitzgerald Operator Good afternoon, and welcome to Applied Digital's Fiscal Second Quarter 2025 Conference Call.
Applied Digital Corporation (APLD) came out with a quarterly loss of $0.66 per share versus the Zacks Consensus Estimate of a loss of $0.14. This compares to loss of $0.10 per share a year ago.
Data center operator Applied Digital on Tuesday posted a smaller-than-expected loss for the second quarter, helped by increased demand for high-performance data center infrastructure and cloud services business.
Applied Digital (APLD 8.02%) stock is posting big gains in Tuesday's trading. The company's share price was up 9.4% as of 11:30 a.m.
Applied Digital's second-quarter fiscal 2025 results are likely to benefit from an expanding data center capacity. However, stretched valuation is a concern.
Applied Digital is transitioning from operating data centers for crypto mining customers to building and operating data centers for larger hyperscaler companies. There is significant growth potential ahead as they are close to signing a 100MW lease deal with a hyperscaler and seeing high interest for an additional 300MW of capacity. The ~$880 million annual revenue potential if the 400MW of capacity gets leased out is far from being priced in by consensus revenue estimates.
The second year of Wall Street's bull market rally didn't disappoint. When the closing bell tolled on Dec. 31, the ageless Dow Jones Industrial Average, benchmark S&P 500, and growth stock-focused Nasdaq Composite had respectively gained 13%, 23%, and 29%, with all three indexes rallying to record-closing highs multiple times in 2024.
Applied Digital could announce the signing of its $2.2 billion lease agreement and a new lease with another hyperscaler during its Q2 earnings on January 14th after hours. Applied Digital's HPC data centers could have a technological edge over existing data centers due to its close relationship with Nvidia, whose engineers helped design the company's Ellendale data center. The strategic location of Applied Digital's data centers in the Dakotas presents significant cost saving opportunities to hyperscalers.
APLD shares benefit from an expanding data center capacity, which aids top-line growth. However, stretched valuation is a concern.
Does Applied Digital Corporation (APLD) have what it takes to be a top stock pick for momentum investors? Let's find out.