Applied Digital Shares Plunge 30% Following Revenue Disappointment, Plans to Divest Cloud Computing Unit

Applied Digital Shares Fall 30% After Revenue Miss, Announces Cloud Computing Unit Sale

Applied Digital (APLD), a Texas-based company that transitioned from crypto mining to high-performance computing (HPC), saw its stock plummet by 30% on Tuesday after reporting disappointing quarterly earnings that missed Wall Street’s expectations.

For the quarter ending February 28, 2025, the company reported $52.9 million in revenue, a 22% increase year-over-year but well below analysts’ consensus estimate of $64.5 million. This 18% miss prompted a sharp drop in APLD’s stock, which was trading around $3.90 in early trading on Tuesday.

Although the company posted a smaller-than-expected non-GAAP net loss of $0.08 per share (against the expected $0.10 loss), it missed its adjusted EBITDA target by 41%, reporting $10 million compared to the $16.9 million analysts had projected. This signaled ongoing margin challenges, primarily due to large infrastructure investments.

A major contributor to the underperformance was the company’s Cloud Services division, which reported a 36% sequential drop in revenue—from $27.7 million in the prior quarter to $17.8 million. This decline stemmed from a shift in the business model from single-tenant contracts to a multi-tenant, on-demand GPU system, a transition that faced some technical hurdles.

In a strategic shift, the company’s board of directors approved a plan on April 10 to sell its Cloud Services business. The sale is part of the company’s efforts to refocus on its core HPC data center operations and potentially transition into a real estate investment trust (REIT) in the future.

CEO Wes Cummins addressed the decision, stating, “We believe that divesting the Cloud Services business will allow us to better align with our long-term strategic goals and create more value for our shareholders.”