Applied Digital Corporation (APLD) is scheduled to announce its second-quarter fiscal 2025 results on January 14.
The Zacks Consensus Estimate projects second-quarter fiscal 2025 revenues at $63.65 million, signifying a significant year-over-year increase of 50.83%. The expected loss is forecasted to be 14 cents per share, consistent with estimates from the last 30 days. This comes after APLD reported a loss of 10 cents per share in the same quarter last year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
In anticipation of the announcement, let’s explore the company’s current situation.
Applied Digital Corporation’s Price and EPS Surprise Trends
Applied Digital Corporation price-eps-surprise | Applied Digital Corporation Quote
Key Considerations for APLD’s Q2 Earnings
Applied Digital, a developer and operator of advanced digital infrastructure for High-Performance Computing (HPC), cloud services, and hosting data centers, has experienced strong revenue growth. This trend is likely to continue in the upcoming quarter.
The company benefits from access to large amounts of affordable energy and its capacity to build high-quality AI data centers, which supports its growth potential.
APLD’s Stock Performance Compared to Its Peers
In the past year, APLD shares have risen by 11%, which falls short compared to a 22% increase in the broader Finance sector and a 19.1% rise in the Zacks Financial Miscellaneous Services industry.
One-Year Performance Chart
Image Source: Zacks Investment Research
APLD’s shares may be considered expensive, reflected in its Value Score of F, indicating a potentially overvalued status.
Currently, APLD’s forward Price/Sales (P/S) ratio stands at 5.4X, significantly above its median of 2.55X and the industry average of 2.62X.
Price/Sales Ratio (F12M)
Image Source: Zacks Investment Research
Enhancing Data Center Capacity to Boost Growth
Applied Digital aims to finalize a lease agreement with a U.S.-based hyperscaler for its new 100 MW facility located at the Ellendale HPC campus, currently under construction. This cutting-edge facility will boast over 369,000 square feet tailored for HPC applications, including AI.
The company is also in the planning stages for two more buildings at this site, which will expand total capacity to 400 MW.
In a recent achievement, APLD successfully energized its main substation transformer at the Ellendale HPC center.
The Data Center Hosting Business streamlines operations to deliver power to cryptocurrency mining clients. As of August 31, 2024, APLD’s 106 MW facility in Jamestown, ND and its 180 MW facility in Ellendale, ND were operating at full capacity.
APLD is gearing up to expedite the monetization of its over 1.4 gigawatt pipeline, planning additional deployments in the second half of fiscal 2025, which commences on December 1.
The company collaborates with notable partners such as NVIDIA (NVDA), Super Micro Computer, Hewlett Packard (HPE), and Dell Technologies (DELL).
Through its partnership with Hewlett Packard, APLD receives powerful and energy-efficient supercomputers, enhancing their cloud offerings to support large-scale AI. Additionally, Dell assists with supplying AI and GPU servers.
The growth of Applied Digital’s data center capacity is promising for its future. Additionally, improvements in liquidity position further enhance its prospects.
On September 5, 2024, the company secured a $160 million private placement agreement with institutional and accredited investors, including NVIDIA.
Furthermore, APLD refinanced a senior secured credit facility with a previous lender, leading to reduced overall capital costs for its Ellendale HPC campus. They acquired $150 million in debt financing through Macquarie Equipment Capital, part of Macquarie Group’s Commodities and Global Markets division.
For investors currently holding APLD stock, the company’s long-term growth outlook appears promising.
Nevertheless, the concern remains regarding its high valuation. Ongoing expenses linked to data center leases for APLD’s cloud operations, which have yet to yield revenue from GPU clusters, pose a challenge.
Currently, Applied Digital holds a Zacks Rank #3 (Hold), signifying that investors may want to await a more favorable entry point for purchasing the stock.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
