Applied Digital Dips Pre-Market On Hyperscaler Delays After Q2 Earnings Beat: Retail Remains Bullish On HPC Growth

Applied Digital Corp. (APLD) shares dropped over 5% in premarket trading Wednesday, following stronger-than-expected fiscal second-quarter results announced after the market closed on Tuesday. 

The decline follows CEO Wesley Cummins' comments suggesting delays in hyperscaler timelines, overshadowing a recent 10% gain fueled by a $5 billion funding deal with Macquarie to develop the Ellendale HPC campus.

“While their timelines may extend longer than initially expected, we remain steadfast in our commitment to delivering our 400 MW data center campus on time and within budget," he said during the Q2 earnings call, as per Koyfin’s transcript. 

The digital infrastructure provider posted a smaller-than-anticipated loss of $0.06 per share, beating the expected loss of $0.14 per share, according to Stocktwits data. 

Revenue grew 51% year-over-year to $63.9 million, in line with analyst estimates.

“This increase was primarily driven by the continued growth of our cloud services business due to the deployment of additional GPU clusters,” said CFO Mohammad Saidal Mohmand, highlighting that the company’s data center hosting segment generated $36.2 million in revenue, while its cloud services segment contributed $27.7 million.

The company said it currently operates 286 megawatts of hosting capacity across its two facilities in North Dakota for its cryptocurrency clients

“As many of you know, Bitcoin recently hit $100,000 and the demand for our services in this sector remains robust,” said Cummins. 

He added that the cloud services segment also continues to grow as the company fulfills existing contracts and evaluates new opportunities in AI-powered applications. Six GPU clusters are currently operational, with plans to adopt next-generation GPUs.

This quarter, the company’s depreciation and amortization expense increased to $26.4 million compared to $13.4 million in the same period of 2024, driven largely by the cloud segment.

“We renegotiated our GPU lease terms, which allowed us to extend the amortization period for GPU leases to a more industry standard time line of 5 years. This adjustment reduced segment D&A expense by $8.5 million for this quarter,” said the CFO.

Applied Digital closed the quarter with $314.6 million in cash and equivalents and $479.6 million in debt.

Applied Digital Corp. Sentiment and Message Volume on Jan.15 as of 8:00 a.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around the stock improved to ‘extremely bullish’ from ‘bullish’ a day ago, as chatter increased to ‘extremely high’ from ‘high’ levels during the same period. 

Users on the platform focused on the company’s updates about its HPC business segment, which was largely seen as positive, and expressed surprise over the stock’s pre-market decline.

Applied Digital's stock has gained 53.43% over the past year. 

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