Applied Digital Shares Drop 12.8% Even After 250% Revenue Surge
Applied Digital’s shares have fallen 12.8% since its fiscal Q2 report, despite revenue jumping 250% to $126.6 million and adjusted EBITDA rising to $20.2 million. The company boosted cash to $2.3 billion after a $2.35 billion notes sale, while debt surged to $2.6 billion for data center expansion.
1. Share Performance
Since reporting second-quarter fiscal 2026 results, Applied Digital’s shares have declined by 12.8%, underperforming the broader market. The drop reflects investor uncertainty as the company ramps capital spending and expands its data center footprint.
2. Q2 Financial Highlights
Revenue soared 250% year-over-year to $126.6 million, driven by HPC tenant fit-out services at Polaris Forge 1 and 15% growth in Data Center Hosting revenue to $41.6 million. Adjusted EBITDA climbed to $20.2 million, while per-share net income improved to breakeven from a 1 cent loss a year earlier.
3. Balance Sheet and Cash Flow
Cash and equivalents jumped from $114.1 million to $2.3 billion following a $2.35 billion senior secured notes offering at 9.25%, while total debt rose to $2.6 billion. Operating cash flow was negative $97.9 million for the first half, reflecting construction and early HPC build-out costs.
4. Growth Outlook
Applied Digital has 600 MW under contract with two hyperscalers, representing $16 billion in potential lease revenues over 15 years, and expects to bring additional 150 MW buildings online in mid-2026 and 2027. The company plans to spin out its Cloud Services division into ChronoScale, retaining over 80% ownership, and is negotiating another 900 MW hyperscale deal.