Stock of Applied Digital rises 6% with strong revenues and growth potential

From Nasdaq: 2025-01-21 11:47:00

Applied Digital Corporation (APLD) has seen a 6.3% increase in shares, outperforming the Finance sector. Revenues for the second-quarter fiscal 2025 rose by 51%, driven by Cloud Services contracts. The company’s Data Center Hosting segment generated $36.2 million in revenues, with plans to expand its capacity to 400 MW.

The company’s stock is trading above the 50-day and 200-day moving averages, indicating a bullish trend. Applied Digital’s access to affordable energy and partnerships with key players like NVIDIA and Dell Technologies position it well for growth in the AI and data center hosting sectors.

APLD’s balance sheet is improving, with $314.6 million in cash and restricted cash. The company secured $5 billion in perpetual preferred equity financing and completed a $450 million offering of Convertible Senior Notes due 2030. However, earnings estimates for fiscal 2025 show a widening loss.

Investors should consider Applied Digital’s expanding data center capacity for long-term growth potential. However, the stock’s overvaluation and higher expenses related to cloud business leases are concerns. With a Zacks Rank #3 (Hold), investors may want to wait for a better entry point to accumulate the stock.



Read more at Nasdaq: Applied Digital Rises 6% in a Week: Buy, Sell, or Hold the Stock?