Applied Digital Exceeds Revenue Expectations as Demand for AI Technology Surges

Applied Digital, a leading provider of data center services, has reported better-than-expected revenue for the first quarter, driven by the growing demand for generative artificial intelligence (AI) technology. The company’s shares surged by 13.5% in early trading following the announcement.

Generative AI, which powers chatbots like ChatGPT, relies on high-processing data centers for training large language models. Applied Digital’s CEO, Wes Cummins, stated that the company is finalizing details for its Garden City facility in Texas. However, the delay in the facility’s opening may impact the company’s AI cloud segment. It’s worth noting that no revenue from the Garden City facility was recognized in the first quarter.

For the quarter ended August 31, Applied Digital reported revenue of $36.3 million, surpassing analysts’ average estimate of $33.8 million. Despite this positive performance, the net loss for the quarter widened to $9.2 million compared to $4.5 million in the same period last year.

Looking ahead, Applied Digital reaffirmed its revenue outlook of $385 million to $405 million for the full-year fiscal 2024. To support its cloud services business, the company has ordered 34,000 graphics processing units (GPUs) and deployed an initial production cluster of 1,024 GPUs in the reported quarter. GPUs have become widely adopted for training AI models due to their processing capabilities.

Applied Digital’s success in meeting revenue expectations highlights the increasing demand for AI technology and data center services. With its focus on providing cutting-edge solutions, the company is well-positioned to capitalize on this growing market. Investors have responded positively to the news, driving the company’s shares higher.

As Applied Digital continues to expand its operations, the forthcoming Garden City facility in Texas holds promise for further growth and innovation in the AI cloud segment. The company remains committed to delivering value to its customers and shareholders, aiming to achieve its revenue targets for the fiscal year.