Applied Digital stock climbs 16% as AI demand fuels data center growth

Shares of Applied Digital surged by 16% on Friday following the company's impressive first-quarter revenue report, which was significantly bolstered by the soaring demand for AI data centers. This remarkable performance has propelled the stock's value up by over 350% this year. In its latest earnings release, Applied Digital reported a first-quarter revenue of $64.2 million, marking an 84% increase compared to $34.85 million during the same period last year. This growth comes as the company continues to expand its operations, including a major lease agreement with CoreWeave worth $7 billion, announced in June, which will add another 150 megawatts of capacity at the Polaris Forge 1 campus in North Dakota. The expansion is expected to elevate the total anticipated lease revenue from this project to an impressive $11 billion. CEO Wes Cummins stated, "With hyperscalers expected to invest approximately $350 billion into AI deployment this year, we believe we are in a prime position to serve as the modern-day picks and shovels of the intelligence era." The new facility will complement two existing data center blocks, which provide 100 MW and 150 MW of capacity respectively. One of these buildings is nearing completion, while construction on the second will commence soon. Additionally, Applied Digital has secured financing from Macquarie Equipment Capital for a second site in North Dakota, named Polaris Forge 2. This new $3 billion facility is set to feature two 150 MW buildings, which will increase the total leased capacity across both campuses to 600 MW. The company expects to bring an initial 200 MW of power online by 2026, reaching full capacity by 2027. Despite this growth, Applied Digital reported a net loss of $18.5 million for the first quarter, translating to a loss of 7 cents per share. This is a decline from the previous year's loss of $4.29 million, or 3 cents per share. Analysts surveyed anticipate a loss of 15 cents per share for the second quarter, with projected revenue of $76 million.