Abstract
APPLIED DIGITAL CORP will report fiscal results on January 07, 2026 Post Market; this preview synthesizes the company’s last quarter performance, current-quarter forecasts on revenue and earnings, and prevailing Street views to frame near-term drivers and risks for shareholders.
Market Forecast
For the to-be-reported quarter, current forecasts imply revenue of $87.51 million, up 38.03% year over year, with EBIT expected at -$24.07 million and EPS at -$0.10, suggesting ongoing ramp costs; year-over-year forecasts point to EPS improvement of 35.55%. Based on the last quarter’s mix, the main business remains data center hosting, while the near-term highlight is continued capacity onboarding and utilization gains, setting up sequential revenue expansion. The most promising segment is the data center hosting business, with last quarter revenue of $64.22 million and positive year-over-year growth, and its scale-up is expected to continue as newly energized capacity flows through.
Last Quarter Review
In the prior quarter, APPLIED DIGITAL CORP delivered revenue of $64.22 million, a gross profit margin of 13.41%, GAAP net profit attributable to the parent of -$18.50 million, a net profit margin of -28.81%, and adjusted EPS of -$0.07, with revenue advancing 5.79% year over year and EPS improving against estimates. The quarter’s highlight was revenue exceeding prior estimates by $14.25 million, reflecting faster-than-expected onboarding in data center hosting. Main business performance was led by data center hosting at $64.22 million revenue, with year-over-year growth of 5.79% amid improving utilization and contract activations.
Current Quarter Outlook (with major analytical insights)
Core Hosting Operations: Utilization, Pricing, and Cost Trajectory
Data center hosting is the core earnings engine for APPLIED DIGITAL CORP, and the quarter is set up for sequential revenue growth as contracted capacity ramps. The forecast revenue of $87.51 million indicates a sizeable step-up from last quarter, while the projected EBIT loss of $24.07 million points to a cost structure still absorbing depreciation, start-up, and power-related expenses associated with newly deployed capacity. A path to improved gross margin depends on a combination of higher utilization, contract mix, and power efficiency gains; management’s recent momentum in onboarding supports better fixed-cost absorption, which can translate into gross margin expansion toward the high-teens if ramp timelines hold. The interplay between take-or-pay features in hosting agreements and actual customer compute demand will be important for sustaining revenue cadence through the quarter and beyond.
High-Potential Growth Vector: New Capacity Onlining and Customer Mix
The most promising vector this quarter is the continued energization of new capacity for data center hosting customers, which underpins the 38.03% year-over-year revenue forecast. As more megawatts are energized, revenue density and fixed-cost leverage typically improve, allowing gross margin to trend higher than the prior quarter’s 13.41% if power procurement and uptime metrics perform as planned. The customer mix within hosting, including enterprise compute and high-performance computing use cases, can also enhance yield through diversified workload profiles and longer-duration contracts, but these benefits require stable commissioning schedules and effective project management. If the company sustains commissioning milestones and reduces non-recurring start-up costs, the EBIT loss profile could narrow faster than modeled, with potential upside to margin expectations in subsequent quarters.
Stock Price Drivers This Quarter: Power Costs, Ramp Execution, and Profitability Path
Three variables are likely to have the greatest influence on the stock this quarter. First is power cost and availability: efficient power sourcing and minimal curtailment are essential to defending gross margin, as even modest volatility can overwhelm early-stage margin gains during a ramp. Second is ramp execution, including on-time energization and customer readiness; any delays can push revenue recognition and dampen sequential momentum, while clean execution can magnify operating leverage and help close the gap to breakeven EBIT. Third is visibility into the profitability path—investors will scrutinize commentary on utilization trends, contract structures, and targeted margin milestones; credible guidance that ties commissioning progress to an improving margin trajectory should support a constructive stock reaction even if EPS remains negative this quarter.
Analyst Opinions
Recent institutional commentary skews bullish. Over the past six months, multiple firms maintained Buy ratings, including Craig-Hallum, Lake Street, and Northland Securities, with noted price targets and reiterated positive stances; no bearish notes were prominent in the same period, tilting the ratio toward bullish views. The majority view argues that APPLIED DIGITAL CORP is positioned to compound hosting revenue through capacity ramps and contract activation, with improving unit economics as utilization rises; analysts emphasize the potential for sequential revenue growth to translate into better fixed-cost absorption and margin recovery. Representative of this stance, coverage from Craig-Hallum highlights continued growth prospects tied to facilities ramp and customer demand, while Lake Street underscores operational execution and pipeline conversion as drivers for upside to estimates; Northland Securities similarly focuses on capacity activation and long-term demand for high-performance compute hosting. The consensus bullish case this quarter is that the company’s projected revenue acceleration to $87.51 million and improving EPS trend toward -$0.10 reflect a constructive inflection in scale, and that clear commentary on power procurement, commissioning progress, and utilization can sustain positive estimate revisions.
