Is Applied Digital Stock a Smart Buy Before Q4 Earnings Report?

Applied Digital APLD is set to report its fourth-quarter fiscal 2025 results on July 30.The Zacks Consensus Estimate for fiscal fourth-quarter revenues is currently pegged at $42.99 million, indicating a decline of 3.09% year over year.The consensus mark for loss is currently pegged at 12 cents per share, wider by a couple of cents over the past 30 days. APLD reported a loss of 52 cents in the year-ago quarter.Applied Digital’s earnings miss the Zacks Consensus Estimate in three of the trailing four quarters, beating once, the earnings surprise being negative 113.42%, on average. Applied Digital Corporation Price and EPS Surprise Applied Digital Corporation price-eps-surprise | Applied Digital Corporation Quote Let’s see how things are shaping up prior to this announcement.Factors to Note for APLD Q4 EarningsApplied Digital, a builder and operator of next-generation digital infrastructure designed for High-Performance Computing (HPC) applications and data center hosting, has been benefiting from rising demand for AI services.Higher spending by hyperscalers, including Microsoft MSFT and Meta Platforms META, has been a key catalyst for APLD. Meta Platforms’ plans to invest between $64 billion and $72 billion, while Microsoft’s capital expenditure is expected to reach $80 billion in 2025. Other tech giants, including Amazon, Alphabet GOOGL, and Oracle, are expanding their AI data center capacity to support cloud services. For 2025, Alphabet now expects to spend $85 billion on capital expenditures. This momentum is expected to have benefited the HPC business.APLD’s Data Center Hosting segment continues to gain momentum despite a 7% year-over-year decline in fiscal third-quarter revenues. The company currently operates 286 megawatts of fully contracted data center hosting capacity for crypto mining clients across two locations in North Dakota, both of which are running at full capacity. A higher Bitcoin price is expected to have benefited the Data Center Hosting segment in the to-be-reported quarter.However, the sluggish Cloud Services business remains a headwind. In the fiscal third quarter, revenues declined $9.9 million sequentially to $27.7 million. In April, the company’s board approved a plan to divest the business.APLD Shares Outperform SectorApplied Digital shares have jumped 40.7% year to date, outperforming the Zacks Finance sector’s return of 11% and the Zacks Financial – Miscellaneous Services return of 8.1%.APLD Stock’s Performance Image Source: Zacks Investment Research Applied Digital stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.In terms of the forward 12-month Price/Sales, APLD is trading at 8.64X, higher than the Zacks industry’s 3.46X.Price/Earnings (F12M) Image Source: Zacks Investment Research APLD Gains From Growing HPC and Data Center BusinessBacked by financing agreements from Macquarie Asset Management ($5 billion) and Sumitomo Mitsui Bank Corporation ($375 million), Applied Digital is building out its Ellendale campus with 400MW of critical IT load, with the first 100MW facility expected to go live in the calendar fourth quarter of 2025.The company’s ability to offset cloud losses hinges on monetizing Ellendale’s AI-ready capacity. With 1.4GW in planned buildout and active lease discussions, Applied Digital has a compelling footprint. However, high capital expenditures ($30–50 million/month) are a headache.Applied Digital’s 250MW lease agreement with CoreWeave for its Ellendale campus is noteworthy. CoreWeave will utilize the new liquid-cooled facility at Ellendale, which is purpose-built for AI workloads.APLD’s plan to divest its Cloud Services business is not only expected to streamline operations but also support a future conversion to a REIT, potentially lowering its cost of capital and boosting its valuation.Applied Digital stock is currently trading above the 50-day and 200-day moving averages, indicating a bullish trend.APLD Stock Trades Above 50-Day and 200-Day SMAs Image Source: Zacks Investment Research Applied Digital currently has a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. 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Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Applied Digital Corporation (APLD): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks