This Little-Known AI Data Centre Stock Grew Revenue 322% in Fiscal Q1—Wall Street Takes Notice

Applied Digital is emerging as a notable artificial intelligence (AI) data-centre infrastructure play after reporting a 322% year-on-year increase in fiscal Q1 revenue, as demand for high-performance computing capacity continues to accelerate.

The company reported $341.9 million in revenue for the three months ended 31st August 2026, up from $80.9 million a year earlier. The result substantially exceeded Wall Street expectations, with analysts surveyed by Zacks forecasting revenue of about $134.1 million.

'Our goal is to establish Applied Digital as the category leader in the design, construction, deployment, and operation of purpose-built AI factories,' said Wes Cummins, chairman and CEO of Applied Digital.

The company is also building a substantial contracted revenue base. Applied Digital said its 210-megawatt Delta Forge 2 lease with a tier-one investment-grade hyperscaler represents approximately $5.2 billion of base-term contracted revenue over 15 years.

It had also said that more than 600 MW of compute capacity is expected to come online over the next 12 months. Management is targeting 3.5 gigawatt to 4 GW of operating capacity by the end of 2030.

High-Performance Computing Hosting Primary Revenue Driver

The sharp revenue growth was driven primarily by the company's expanding high-performance computing (HPC) Hosting business, including a substantial contribution from tenant fit-out services and newly recognised data-centre rental revenue.

HPC Hosting generated $262.6 million of revenue during the quarter, including $65.8 million from base rent, $183.5 million from tenant fit-out services, and $13.3 million from tenant recoveries.

The company also reported $37.8 million from its Data Centre Hosting business, which was broadly unchanged from the $37.9 million recorded a year earlier.

Data-centre rental and other revenue reached $79.1 million, compared with no comparable revenue in the prior-year quarter because Applied Digital's HPC Hosting business had not yet begun generating rental revenue.

Applied Digital's adjusted revenue, which excludes the results of majority-owned ChronoScale, was $300.4 million, compared with $64.2 million a year earlier.

Adjusted Loss Narrows Despite Rapid Expansion

The company's rapid expansion came with substantial costs. Applied Digital reported a $221 million net loss attributable to common stockholders, equivalent to $0.76 per diluted share, compared with an $18.5 million loss a year earlier.

However, its adjusted net loss narrowed to $4.1 million, or $0.01 per diluted share, from $7.6 million, or $0.03 per share, in the prior-year period.

Adjusted EBITDA rose sharply to $64.4 million from $500,000, while net operating income reached $58.8 million. The company defines these adjusted measures as non-GAAP figures and excludes ChronoScale's results.

In a major development, the company took its first step outside the US, signing an agreement for up to 1 GW of potential power capacity in Finland. Management highlighted in the earnings release that Finland shares many of the characteristics that made North Dakota a compelling location for the company's AI factories: a cool climate that supports efficient operations, access to abundant and reliable power, and room to scale.

Although Applied Digital's near-term strategy and execution priorities remain on its US portfolio, Finland presents as an opportunistic step into a market with lucrative long-term potential.

Wall Street Takes Notice of AI Infrastructure Expansion

The results have drawn fresh attention from analysts as Applied Digital expands its AI-focused data-centre footprint.

UBS initiated coverage of the stock in September with a 'Buy' rating and a 12-month price target of $38 per share, while Jones Trading subsequently initiated coverage with a $70 price target.

Elsewhere, Texas Capital Securities maintained a Buy rating with a $71 target. Shares rose in premarket trading on Thursday following the earnings release.

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