What Happened?
Shares of digital infrastructure provider Applied Digital (NASDAQ: APLD) fell 30.8% in the afternoon session after the company reported weak first-quarter 2025 (fiscal Q3) results, which significantly missed Wall Street's sales expectations.
A key issue was just how much money the company lost during the quarter as it burned through a lot more cash, given its poor profit margin. Now, to be fair, revenue did grow 22% from last year, mostly because cloud services sales grew over 200%. But the cloud business actually shrank compared to the previous quarter because they switched how they lease out GPUs. Hosting sales also dipped, exposing further challenges in that segment.
Looking ahead, the company offered no definitive sales guidance and revealed plans to divest its Cloud Services unit, raising uncertainty about near-term growth. Additionally, tariff-related concerns cast doubt on the sourcing of components for the data center hosting business. Overall, this was a weak quarter, highlighting significant issues.
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What The Market Is Telling Us
Applied Digital’s shares are extremely volatile and have had 122 moves greater than 5% over the last year. But moves this big are rare even for Applied Digital and indicate this news significantly impacted the market’s perception of the business.
Applied Digital is down 55.3% since the beginning of the year, and at $3.49 per share, it is trading 67.3% below its 52-week high of $10.68 from November 2024. Investors who bought $1,000 worth of Applied Digital’s shares 5 years ago would now be looking at an investment worth $29,074.
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