What's Happening?
Applied Digital has reported stronger-than-expected Q1 results, leading to a surge in its stock price. The AI data center company announced a narrower-than-expected quarterly loss and a new lease deal with CoreWeave, which fills its flagship data-center site. The company reported an adjusted loss of $0.03 per share, better than Wall Street's forecast of a $0.16 loss, with revenue reaching $64.2 million, surpassing expectations of $50 million. The results were driven by higher utilization rates across its infrastructure portfolio and growing demand for AI and cloud compute power. A new lease agreement with CoreWeave for 150 megawatts of power at Applied Digital's Polaris Forge 1 campus in North Dakota was highlighted, bringing the site to full capacity.
Why It's Important?
The strong Q1 results and new lease agreements are significant for Applied Digital as they provide clear revenue visibility for the next several years. The company's ability to secure substantial lease agreements with AI-focused clients like CoreWeave indicates robust demand for its services and strengthens its position in the AI cloud infrastructure market. The positive financial performance and strategic partnerships are likely to enhance investor confidence and support the company's long-term growth outlook. Applied Digital's stock has already seen a remarkable 238% gain this year, outperforming the S&P 500, which has risen about 14.5% in the same period.
What's Next?
Applied Digital plans to continue expanding its infrastructure to meet increasing demand. Construction at the North Dakota facility remains on schedule, and the company has begun work on its next site, Polaris Forge 2, which will add another 200 megawatts of capacity. The first phase is expected to go online in 2026, with full capacity by 2027. The company has secured funding to support its development pipeline, drawing $112.5 million from its preferred equity facility with Macquarie Asset Management and raising additional capital through stock offerings. These developments suggest continued growth and expansion in the AI infrastructure sector.
