The Zhitong Finance App learned that the latest quarterly results announced by data center operator Applied Digital (APLD.US) exceeded market expectations, but failed to significantly boost investor confidence. The stock fell more than 1.8% on Thursday. Despite the lackluster share price performance, Wall Street analysts are generally optimistic about the company's long-term growth prospects, believing that as demand for artificial intelligence (AI) and high-performance computing (HPC) continues to grow, Applied Digital is expected to achieve further development by expanding the scale of data centers.
According to financial reports, Applied Digital's revenue for the first fiscal quarter reached 341.9 million US dollars, up 322.5% year on year; after adjustment, the loss per share was 0.01 US dollars, which was 0.29 US dollars better than market expectations, and both revenue and profit performance exceeded analysts' expectations.
Wells Fargo said that the development and commercialization of Applied Digital's remaining 1.4 gigawatts of data center capacity is still in line with expectations, so it raised its target price for the share from $50 to $55. The bank expects Applied Digital to sign another 250 MW data center lease agreement before the end of this year, and the lease price of the new contract is expected to be about 15% higher than the original lease agreement signed by the company. This means that as demand for AI computing power grows, the company is expected not only to expand the rental scale, but also to obtain higher rental income.
However, the US investment bank Needham believes that the extent to which Applied Digital's performance has exceeded expectations this time is relatively limited. The agency notes that the company is currently pitching around 1.3 gigawatts of data center capacity to potential customers, most of which are not expected to be put into operation until 2028.
Needham also said that this quarter's revenue exceeding expectations was largely due to one-time revenue from supporting data center construction services, not all driven by continuous rental revenue growth. However, the basic rental income of the company's high-performance computing data center was also better than expected, indicating that its core leasing business continues to grow.
In contrast, securities research firm Craig-Hallum is more optimistic about Applied Digital's long-term development prospects. The agency maintains the stock's “buy” rating, with a target price of $79, and believes the company is gradually building a large-scale data center operator.
Craig-Hallum said, “We remain convinced that Applied Digital is building a large-scale enterprise and that the way it is expanding is predictable and replicable.”
The agency pointed out that Applied Digital continues to be at the forefront of the industry in data center site selection, customer contract signing, facility design, and infrastructure construction, while improving the efficiency of project construction and expansion through a more standardized development model.
As the scale of data center projects in the company's reserves continues to expand, Craig-Hallum believes that this standardized and replicable development model will help Applied Digital continue to expand its business scale in the next few years and seize the opportunities brought by the growing demand for AI computing power infrastructure.
However, Applied Digital's growth prospects still depend on whether the new data center can be completed as planned and whether subsequent leases can be successfully signed. Although short-term stock prices failed to strengthen due to performance exceeding expectations, institutions such as Wells Fargo and Craig-Hallum still believe that the company's expanding reserves for data center projects will support future revenue growth.