APLD Stock Aims the Highs Above $40 as Data Center Expansion Gains Traction
Applied Digital’s latest earnings and confirmation of a new AI-focused data center campus have reignited upside momentum, pushing the stock
Quick overview
- Applied Digital's stock surged approximately 10% following the announcement of a new AI-focused data center campus, signaling renewed investor confidence.
- The Delta Forge 1 campus will initially support 430 megawatts of power, with operations expected to begin by mid-2027, highlighting the company's growth strategy.
- Despite strong earnings and a significant revenue increase, investor sentiment remains cautious due to high valuations and execution risks associated with scaling operations.
- The proposed restructuring involving a spin-off and merger adds strategic complexity, raising questions about capital allocation and execution focus.
Applied Digital’s latest earnings and confirmation of a new AI-focused data center campus have reignited upside momentum, pushing the stock back toward record highs while keeping execution risks firmly in view.
Market Reacts to a High-Stakes Expansion Update
Applied Digital shares jumped roughly 10% on Friday after the company confirmed it has begun construction on a new large-scale “AI factory” campus, a move that reinforced confidence in its high-performance computing (HPC) expansion strategy. The rally marked a notable shift in sentiment following months of volatility, with investors responding positively to tangible progress on infrastructure buildout.
At the same time, enthusiasm remained measured. Markets continue to weigh the long-term potential of AI-driven data centers against the heavy capital requirements and operational complexity of scaling power-intensive facilities. For Applied Digital, the latest update strengthened the growth narrative—but also raised the bar for execution.
Delta Forge 1 Signals Meaningful Capacity Growth
At the center of the announcement is the Delta Forge 1 campus, which will initially be supported by 430 megawatts of utility power. Of that total, approximately 300 megawatts will be dedicated to “critical IT load,” the portion of capacity that directly powers servers and generates revenue.
Applied Digital expects the facility to begin operations by mid-2027, with additional expansion phases planned from 2028 onward. In an environment where AI infrastructure valuations are increasingly sensitive to timelines and utilization rates, the project represents a key inflection point.
Markets have grown less impressed by headline megawatt figures alone. Instead, investor focus has shifted toward how quickly that capacity can be converted into signed customer contracts and recurring revenue.
Earnings Reinforce the Scale of the Buildout
The company’s fiscal second-quarter 2026 earnings release added substance to the expansion story. Applied Digital reported revenue from continuing operations of $126.6 million, representing a staggering 250% increase year over year.
Just as important was the improvement in profitability metrics. Net loss attributable to common shareholders narrowed to $31.2 million, down 76% from the prior year, while net loss per share improved to $0.11. Adjusted EBITDA reached $20.2 million, underscoring progress toward operating leverage even as capital spending remains elevated.
For investors, the combination of rapid revenue growth and shrinking losses helped validate the company’s aggressive investment strategy—at least for now.
A Powerful 2025 Raised the Stakes for 2026
Applied Digital entered 2026 with unusually high expectations after one of the strongest performances in the AI infrastructure space last year. The stock surged more than 200% in 2025, at one point gaining nearly 30% in a single week as enthusiasm around data centers and AI workloads peaked.
That rally, however, left little margin for error. At current levels, Applied Digital trades at roughly 33 times sales, a valuation that assumes continued execution and timely customer onboarding. As a result, investor sentiment became more discerning late last year, shifting from speculative enthusiasm to a sharper focus on funding, utilization, and returns on invested capital.
Late-2025 Pullback Tested Investor Conviction
After reaching highs above $40 in October, Applied Digital shares entered a steep correction, losing more than half their value during the final months of 2025. The stock briefly dipped below $20 as markets broadly rotated away from high-beta AI infrastructure names.
The selloff reflected macro and sector-wide concerns rather than company-specific deterioration. Rising interest rates, valuation fatigue, and skepticism around AI monetization timelines all weighed on sentiment. Still, technical support emerged near the 20-week simple moving average, suggesting that long-term conviction had not fully eroded.
That base proved crucial, setting the stage for the recent rebound.
Strategic Complexity Adds Both Optionality and Risk
Investor sentiment also shifted following disclosure of a proposed restructuring involving a spin-off of Applied Digital’s cloud services unit and a merger with Ekso Bionics to form a new entity, tentatively named ChronoScale.
Under the non-binding proposal, Applied Digital would retain roughly 97% ownership of the combined business, with Ekso shareholders holding the remaining stake prior to additional fundraising. While the idea introduced a broader strategic vision, it also added complexity and raised questions around capital allocation and focus.
Markets initially struggled to price in the proposal, reflecting unease about execution risk and potential dilution.
Technical Momentum Improves, Confirmation Still Needed
From a chart perspective, Applied Digital’s recovery has been constructive but remains in a proving phase. The stock has reclaimed key short-term levels and is now trading back toward the October highs near $40.
APLD Chart Weekly – The 20 SMA Has Turned Into Support
The 20-week simple moving average has turned into support again, signaling improving sentiment and renewed buying interest. However, longer-term resistance remains overhead, and sustained follow-through will likely depend on continued progress in securing customer contracts tied to new capacity.
Outlook: Execution Now Matters More Than Vision
Applied Digital’s recent rally reflects renewed confidence that its AI-focused data center strategy is moving from concept to execution. Strong earnings, narrowing losses, and visible construction progress have helped restore momentum after a bruising correction.
Still, with valuations elevated and capital intensity high, markets are unlikely to reward promises alone. The next phase for Applied Digital will hinge on turning megawatts into monetized workloads—proving that scale can translate into durable cash flows rather than prolonged investment cycles.
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