Applied Digital Corporation Set to Report Q2 Earnings Soon

Applied Digital Corporation is preparing to unveil its second-quarter fiscal 2025 results on Jan. 14. With anticipated revenue growth of over 50%, investors are eager to see if the company can meet expectations despite recent challenges and its higher valuation.

Date: 11-01-2025

AI Rating: 6

Revenue Growth Forecast
Applied Digital Corporation is projected to post revenues of $63.65 million for the second quarter of fiscal 2025, showing an impressive year-over-year growth of 50.83%. This anticipated growth could positively influence stock prices, reflecting increasing demand for its digital infrastructure and data center services.

Earnings Per Share (EPS) Outlook
The consensus mark indicates a projected loss of 14 cents per share, compared to a loss of 10 cents per share reported in the same quarter last year. This slight increase in losses could raise concerns among investors regarding operational efficiency and profitability, potentially affecting stock performance negatively.

Performance Context
Despite the expected revenue growth, APLD's stock performance over the past year has underperformed compared to the broader finance sector and the Financial Miscellaneous Services industry. This underperformance could be attributed to its higher valuation metrics, including a forward Price/Sales (P/S) ratio of 5.4X, significantly above its historical median of 2.55X. Such a stretched valuation might deter potential investors or lead current investors to reassess their positions, thus affecting stock prices.

Market Factors and Partnerships
APLD benefits from expanding data center capacity and partnerships with major players like NVIDIA. These collaborations could strengthen its market position, but the ongoing high costs associated with data center leases and construction could be a headwind against the anticipated growth. Investors may remain cautious about how these uncertain factors interplay with overall financial performance.

Conclusion
Given the mixed signals from revenue growth expectations and potential operational losses, together with market underperformance and high valuation concerns, APLD's stock price may experience volatility. Investors should monitor the upcoming earnings announcement closely to assess if the performance aligns with expectations.

Stocks: APLD NVDA HPE DELL