Applied Digital shares hit an all-time high as revenue increases, shifts to AI
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Applied Digital is only beginning to make progress with its plan to diversify away from the cryptocurrency mining industry, but the data-center company’s shares to soared 17% on Tuesday after it announced a near-tripling of fiscal Q4 sales and the signing of its first artificial-intelligence (AI) clients.
The gain came despite a $6.5 million net loss, wider than the $2.3 million a year earlier, but the stock popped $1.46 to $10.24.
“That’s largely coming from beating revenue expectations and color on its AI business,” says John Todaro, senior research analyst at Needham.
Applied, which formerly focused on providing power for its own and contract bitcoin mining operations, brought in $22 million of revenue from hosting in the quarter ending in May, up from $7.5 million a year earlier.
Part of the increase in revenue reflected expanded capacity at its facility in Ellendale, North Dakota, while its facility in Jamestown, also in North Dakota, was fully utilized during the period. A third site, in Garden City, Texas, is close to coming on line, the company said. Demand “remains robust,” it added.
While Applied has worked to separate itself from the volatile world of crypto, changing its name from Applied Blockchain last year, hosting crypto mining activities still account for 100% of revenue. The company says it is looking to expand into high-performance computing applications, such as AI.
Alongside its earnings report, Applied also announced a pair of contracts with AI customers, totaling up to $640 million over 36 months. Customers include Andreessen Horowitz-backed Character AI. The company’s AI cloud service, operated through its subsidiary Sai Computing, is likely the driver for the renewed confidence in its share price, says Todaro.
“They’re real,” Todaro says of Applied Digital’s AI plans. “That gave confidence to whether or not they do have a real AI pipeline.”
Revenue from its AI business won’t come until next quarter, says Todaro, and even then bitcoin mining will still be responsible for a majority of sales.
Cryptocurrency miners have been performing quite well this year. New York City-based Bit Digital, jumped 627% in the first half, making it one of the best performing small-cap stocks in the period.
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