Applied Digital reported Q2 revenue of $126.6 million, a 250.1% increase year-over-year driven by rapid expansion of its high-performance computing hosting business. Despite this top-line surge, the company posted a loss of $0.11 per share compared with a loss of $0.06 per share in the prior-year period, resulting in a negative net margin of 43.5%. Investors should note that strong execution has yet to translate into profitability.

As of the end of Q2, Applied Digital held approximately $2.3 billion in cash and marketable securities. However, management forecasts sustained negative free cash flow through fiscal 2027 as it ramps capacity to meet AI demand. The company has outlined capital expenditures exceeding $800 million per year for the next three years, and has indicated that additional equity raises will be necessary to fund its 5-gigawatt buildout plan, effectively diluting existing shareholders.

To overcome a projected shortage of traditional gas turbines—where lead times extend to 2031—Applied Digital has partnered with Babcock & Wilcox to deploy boilers and steam turbines. The deal will deliver 1 GW of on-site power by 2028, enabling the company to bring AI computing campuses online up to four years earlier than competitors relying on standard turbine equipment. This strategic move underpins a 15-year lease agreement expected to generate approximately $5 billion in revenue for 200 MW of AI capacity at the Polaris Forge 2 campus.