Applied Digital's third quarter results were well received by the market, as the company surpassed Wall Street’s expectations for both revenue and adjusted earnings per share. Management attributed the outperformance to accelerated demand for AI and high-performance computing infrastructure, as well as expanded long-term lease agreements with major hyperscale customers. CEO Wes Cummins emphasized that the company’s ability to secure and deliver on large-scale data center projects, particularly through its partnership with CoreWeave, drove a significant ramp in contracted revenue and operational integration.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Applied Digital’s Q3 Earnings Call

• Nick Giles (B. Riley Securities) asked about the timeline and structure of project financing for both buildings at Polaris Forge One, with CFO Saidal Mohmand confirming efforts to secure facility-wide financing and noting it is one of the largest tenant-backed deals in the market.
• Rob Brown (Lake Street Capital Markets) inquired about the pace of negotiations with new hyperscalers for additional campus sites. CEO Wes Cummins responded that ongoing discussions are expected to be a constant feature, reflecting accelerating market demand.
• Mike Randolph (Northland Securities) questioned how the Macquarie financing structure would affect future capital needs, with Cummins stating it enables scaling up without repeated equity raises and provides clarity on expected dilution.
• Logan (Craig-Hallum, for George Sutton) asked if large-scale, gigawatt-level site capacity is becoming standard for hyperscaler leases, and Cummins confirmed that most customers now require rapid initial capacity with the ability to scale to a gigawatt or more over time.
• Michael Donovan (Compass Point) sought clarification on supply chain constraints for long-lead equipment, with Cummins explaining that Applied Digital pre-secured manufacturing capacity, mitigating risks from industry-wide lead time inflation.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be watching (1) the pace at which Applied Digital converts its development pipeline into signed long-term leases with new hyperscaler customers, (2) updates on the timing and execution of ongoing construction projects, particularly at Polaris Forge One and Two, and (3) management’s ability to maintain efficient cost structures and project financing as expansion accelerates. Progress on divesting the cloud services business and developments in supply chain partnerships will also be critical markers of execution.

Applied Digital currently trades at $37.95, up from $29.25 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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