Applied Digital Stock Jumps 5% as Explosive AI Data Center Revenue Soars 139% in Q3

DALLAS — Applied Digital Corp. shares climbed more than 5% in early trading Monday to $27.58 as investors cheered the company's accelerating pivot to high-performance computing and AI data centers, highlighted by a 139% surge in fiscal third-quarter revenue that far exceeded Wall Street expectations and underscored strong hyperscaler demand for its specialized infrastructure.

The Nasdaq-listed stock (APLD) traded with solid volume as the digital infrastructure provider continued to benefit from last week's fiscal Q3 2026 results, released April 8. Revenue reached $126.6 million for the quarter ended Feb. 28, up sharply from $52.9 million a year earlier, driven largely by the first full quarter of operations at its Polaris Forge 1 campus hosting CoreWeave's AI workloads.

Approximately $71 million of the revenue increase came from the HPC hosting business, including base rent, tenant fit-out services and power pass-throughs. Adjusted revenue, a non-GAAP metric, hit $108.6 million, while adjusted net income was $33.2 million or $0.09 per diluted share — beating consensus estimates that had called for a loss.

The results marked a pivotal moment in Applied Digital's transformation from a blockchain-focused operator to a major player in AI-ready data centers. CEO Wes Cummins noted accelerating demand from hyperscalers seeking high-density, liquid-cooled capacity. "We are seeing a clear acceleration in demand for high-performance AI data center capacity, with hyperscalers as aggressive as we have ever seen them," he said in the earnings release.

Applied Digital has secured landmark long-term leases that provide massive revenue visibility. CoreWeave holds 400 MW under contract at Polaris Forge 1, representing roughly $11 billion in prospective lease revenue over the lease terms. A separate approximately 15-year deal with a U.S.-based investment-grade hyperscaler covers 200 MW at the under-construction Polaris Forge 2 campus, expected to generate about $5 billion. Combined, these agreements total 600 MW of leased capacity and approximately $16 billion in aggregate prospective revenue before renewals.

In March, the company priced a $2.15 billion private offering of senior secured notes to fund development of Polaris Forge 2, backed by the hyperscaler lease. This project-finance-style structure allows Applied Digital to retain significant equity ownership while limiting corporate capital at risk. The company also entered a $100 million development facility with Macquarie Equipment Capital to support new projects.

Recent agreements with CoreWeave enhanced credit quality for the leases. As part of CoreWeave's debt refinancing — which earned an investment-grade A3 rating — leases were restructured through a CoreWeave SPV subsidiary, backed by unconditional guarantees from CoreWeave Inc. and a $50 million letter of credit for one facility. These steps strengthen security for Applied Digital's own 9.250% Senior Secured Notes due 2030.

The company is aggressively scaling capacity. Polaris Forge 1's first 100 MW building is fully operational, with additional phases coming online. Polaris Forge 2 is advancing, with initial capacity targeted for calendar 2026 and full buildout by early 2027. Applied Digital broke ground on the 430 MW Delta Forge 1 campus in a southern U.S. state in January and continues marketing over 4 GW of accessible power across its pipeline.

Despite the revenue momentum, challenges remain evident. The company reported a GAAP net loss of $100.9 million or $0.36 per share in Q3, widened by interest expense, build-out costs and a $59.7 million non-cash write-down related to its legacy cloud segment. Operating losses have grown as the firm invests heavily in expansion, with profitability not expected before 2028 according to some analyst models.

Applied Digital ended the period with a strong liquidity position approaching $2 billion in cash after recent financings, providing runway for its ambitious growth plans. However, the capital-intensive nature of data center development means ongoing funding needs and potential dilution risks persist.

Analysts have grown increasingly bullish on the AI data center story. Consensus ratings lean toward Strong Buy, with average price targets around $37 to $44 and some as high as $58. The stock has been volatile — surging on positive lease news but pulling back after earnings due to the widened loss and one-time items. Monday's gain reflected renewed confidence following the earnings beat and strategic financing moves.

The broader AI infrastructure boom has created tailwinds for specialized providers like Applied Digital. Hyperscalers and AI companies require massive, power-hungry facilities optimized for GPU clusters, liquid cooling and high-density racks — precisely the focus of Applied Digital's campuses. Its early investments in sustainable, high-power designs position it to capture share in a market where power availability and speed to market are critical constraints.

Management highlighted improving operational metrics and tenant diversification efforts. The shift toward recurring base rent revenue from long-term leases improves the quality of earnings compared with one-time fit-out services, though the latter still contributed significantly in Q3.

For investors, Applied Digital represents a high-growth, high-risk play on the AI buildout. Success hinges on timely execution of campus expansions, securing additional hyperscaler tenants and navigating rising interest costs and construction challenges. Competition is intensifying from larger players and specialized operators such as CoreWeave itself, though Applied Digital's model of owning and leasing infrastructure provides a differentiated path.

The company has also strengthened governance and leadership, adding experienced directors and focusing on execution discipline. Its designation as Best Data Center in the Americas 2025 by Datacloud underscores industry recognition.

As trading continued Monday, the stock's performance suggested momentum players and longer-term believers in AI infrastructure were stepping in after last week's post-earnings reaction. Full fiscal 2026 guidance and updates on capacity ramps will be key upcoming catalysts, with management expecting significant revenue growth as additional megawatts come online over the next 12-18 months.

Applied Digital's rapid revenue scaling — from tens of millions to over $126 million in a single quarter — illustrates the explosive potential of the sector. Yet the widened losses serve as a reminder of the heavy upfront investments required to build the "AI factories" powering the next wave of technological innovation.

With $16 billion in contracted revenue visibility, strong financing partnerships and a clear pipeline of projects, Applied Digital has established itself as a nimble contender in the data center arms race. Whether it can convert that backlog into sustainable profitability while managing balance sheet risks will determine if the current rally has legs.

For now, the market appears willing to reward the topline momentum and strategic positioning in one of tech's hottest growth areas.