Applied Digital Corporation (NASDAQ: APLD) shares have climbed 8.4% since the company’s most recent earnings report, outpacing the S&P 500 over the same period.
The strong price action raises an important question for investors: whether the positive momentum will hold heading into the next earnings release, or whether a pullback is overdue.
Applied Digital reported a loss of 39 cents per share in the fourth quarter of fiscal 2026, a deterioration from a loss of 24 cents in the year-ago quarter, missing the Zacks Consensus Estimate of 18 cents by 116.67%.
On the revenue side, the company delivered a standout quarter, with revenues surging 407% year over year to $258.7 million, beating the Zacks Consensus Estimate of $240 million by 7.79%.
Growth was driven primarily by the ramp-up of HPC tenant fit-out services at Polaris Forge 1 and continued strength across the Data Center Hosting Business.
The Data Center Hosting Business generated $37.3 million in revenues, broadly consistent year over year, with both the Jamestown 106 MW and Ellendale 180 MW facilities operating at full capacity as of May 31.
That segment produced $12.5 million in operating profit on a reported asset base of $113.8 million, making it the company’s highest return on asset business.
The HPC Hosting Business contributed $203 million in revenues, comprising $152.4 million from tenant fit-out services, $44.1 million in base rent, and $6.5 million in tenant recoveries, generating $26.2 million in operating profit.
The business now spans five contracted campuses totaling roughly 1.4 gigawatts of critical IT load, following three new leases signed with a single high-investment-grade hyperscaler since the prior quarter.
During the quarter, Applied Digital completed the separation of its Cloud Services Business, combining it with Ekso Bionics Holdings to form ChronoScale Holdings Corporation, with Applied Digital retaining approximately 96% ownership.
Selling, general and administrative expenses surged 303% year over year to $165.3 million, driven largely by $116.8 million in stock-based compensation tied to accelerated vesting and grant activity related to the ChronoScale separation.
As of May 31, Applied Digital held cash, cash equivalents and restricted cash of approximately $4.2 billion, up from $2.1 billion as of February 28, while total debt stood at approximately $5 billion.
Operating cash flow turned strongly positive at $89.7 million for the fiscal year ended May 31, 2026, a significant improvement from cash used in operations of $115.4 million in the prior fiscal year.
Applied Digital ended the fiscal year with approximately $36 billion in total contracted lease revenue, or approximately $86 billion including renewal options, across its 1.4 gigawatt portfolio of AI Factory campuses.
Management is in advanced talks to expand capacity by 100 MW and 150 MW with two existing investment-grade customers, which would lift total capacity to 1.66 gigawatts and add over $6 billion in contracted revenue at current rates.
The company is also working with Base Electron to develop roughly 1.2 gigawatts of natural gas fired generation in the Dakotas to support further expansion of its campus infrastructure.
Applied Digital now expects to hit its $1 billion annual net operating income target roughly three years ahead of schedule, with quarterly capital expenditure guided at approximately $600 million.
Despite the revenue beat and bullish outlook, the Zacks Consensus Estimate for Applied Digital has shifted downward by 27.5% over the past month, reflecting broad analyst caution.
The stock currently carries a Growth Score of B but scores an F on value and a C on momentum, resulting in an aggregate VGM Score of D and a Zacks Rank of 4, indicating a Sell rating.
For comparison, Blackstone Inc. (NYSE: BX), another stock in the Zacks Financial – Miscellaneous Services industry, gained 7.1% over the past month and reported revenues of $3.8 billion for the quarter ended June 2026, a 23.7% year-over-year increase, with EPS of $1.52 compared to $1.21 a year ago.
