Highlights

  • Applied Digital shares rose after reporting 250% revenue growth in fiscal Q2.
  • The company is negotiating deals for 900 MW of AI-focused data center capacity.
  • Adjusted EBITDA increased to USD 20.2M despite negative free cash flow.

Applied Digital (NASDAQ:APLD) reported fiscal second-quarter revenue of USD 126.6M, representing a 250% increase from the prior year. The high-performance computing (HPC) segment contributed USD 85M, with USD 73M coming from tenant fit-out services for large clients, mainly CoreWeave. While these services carry lower gross margins, they provide a foundation for potential recurring revenue in the future.

The data center hosting business generated USD 41.6M in revenue, up 15% year-over-year, with operating income reaching USD 16M. This segment operates two facilities in North Dakota, utilizing 286 MW of power for cryptocurrency mining.

Strategic Moves and Business Structure
Applied Digital continues to evolve its operations. The company is spinning out its cloud computing unit and merging it with EKSO Bionics Holding (NASDAQ: EKSO) to create ChronoScale. Alongside this, Applied Digital is pursuing conversion to a real estate investment trust (REIT), reflecting its focus on data center real estate rather than traditional tech services.

Cash Position and Profitability
At the end of the quarter, Applied Digital held USD 1.9B in cash against USD 2.6B in debt. Operating cash flow was negative USD 97.9M, while free cash flow through the first half of the fiscal year reached negative USD 899.4M. Adjusted net income was USD 0.1M, and adjusted earnings per share remained flat. Adjusted EBITDA improved to USD 20.2M, compared with USD 6.1M in the same period last year.

Data Center Expansion and AI Focus
Applied Digital is in advanced discussions with multiple hyperscalers for 900 MW of AI-optimized data center capacity. Its previous experience as a Bitcoin miner provides access to low-cost power, a key resource in supporting AI workloads, including training large language models and inference tasks.

The combination of tenant fit-out services, AI infrastructure, and hosting capabilities positions Applied Digital as a specialized provider in the AI-focused data center market.

Analysts Update
In January 2026, analysts showed a moderately positive outlook for APLD. Freedom Capital Markets’ Meeks rated it “2-BUY” with a USD 36.00 target (06-Jan), while Roth Capital Partners’ Aftahi set a “2-BUY” at USD 58.00 (08-Jan). and Citizens’ Miler maintained a “2-Market Outperform” at USD 40.00 (07-Jan), ). The mean rating stands at 1.83, reflecting generally optimistic sentiment.

Share Price Performance
Applied Digital Corp shares closed at USD 37.68 on January 09 , up 17.97% for the day. The stock opened at USD 32.93 and traded within a range of USD 31.82 to USD 38.32.