Applied Digital Corporation (APLD) is set to report its fourth-quarter fiscal 2025 results on July 30. The Zacks Consensus Estimate for fourth-quarter revenues is $42.99 million, a 3.09% decline year over year. The consensus loss estimate is 12 cents per share, wider than the year-ago loss of 52 cents. APLD has missed earnings estimates in three of the last four quarters.

APLD has been benefiting from increased demand for AI services, with higher spending by tech giants like Microsoft (MSFT) and Meta Platforms (META) driving growth. APLD’s Data Center Hosting segment is gaining momentum, with 286MW of capacity fully contracted for crypto mining. However, the Cloud Services business remains a challenge, with plans for divestment.

Applied Digital stock has outperformed the finance sector, with a 40.7% increase year-to-date. However, the stock is trading at a stretched valuation, with a forward Price/Sales ratio of 8.64X. APLD is focusing on growing its High-Performance Computing and Data Center business, backed by significant financing agreements.

Despite challenges in the Cloud Services segment, APLD is capitalizing on the growth of its HPC and Data Center business. The company’s plan to divest its Cloud Services business could streamline operations and potentially lower its cost of capital. APLD stock is currently trading above key moving averages, indicating a bullish trend.

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Read more at Nasdaq: Is Applied Digital Stock a Smart Buy Before Q4 Earnings Report?