On Thursday, Lake Street Capital Markets adjusted its outlook on shares of Applied Blockchain Inc (NASDAQ: APLD), raising the firm's price target from $7.00 to $11.00 while retaining a Buy rating. The adjustment follows a quarter in which Applied Blockchain's performance exceeded expectations, with both its Bitcoin hosting and AI Cloud businesses operating at near full capacity.
The company reported an EBITDA at an annualized rate of $80 million, aligning with estimates and marking the first quarter to reflect such figures. This development is seen as a positive step in restoring management's credibility, which had been challenged earlier in the calendar year 2024. Moreover, the AI Cloud business has been successful, with six clusters currently operational and plans to expand by adding clusters to utilize the remaining data center capacity.
Management at Applied Blockchain is also close to finalizing a significant hyperscaler contract, which is 98%-99% complete. The contract pertains to the first 100 MW data center, including options for two subsequent 150 MW facilities. With long-term project financing already secured, pending the lease contract's finalization, the company anticipates this deal to act as a share value catalyst.
In light of these developments, Lake Street Capital Markets has increased its price target for Applied Blockchain to reflect the potential value of the company with a fully operational 400 MW of AI data centers, taking into account an expanded share count. The new $11 price target is derived from assigning $2 per share for the base business and $9 per share for the planned 400MW AI data center capacity.
In other recent news, Applied Blockchain Inc has reported a 67% surge in its fiscal first quarter 2025 revenue to $60.7 million, primarily driven by its data center hosting and cloud services. However, the company also reported an adjusted net loss of $21.6 million.
Craig-Hallum has increased the stock price target for Applied Blockchain to $12.00 from the previous $10.00, maintaining a Buy rating. The firm highlighted the company's strong positioning due to significant demand and its ability to rapidly build out its facilities.
Analysts at Craig-Hallum and Needham noted Applied Blockchain's confidence in securing leases and swift progress on construction, particularly in the hydrocarbon-rich regions of the Dakotas. The company has also secured power for its entire 400MW artificial intelligence campus in Ellendale and obtained 300MW of backup generators.
In addition, Applied Blockchain is marketing 1.4GW of power, indicating a strategic move to acquire power rights in advance of surging demand. Needham has maintained its Buy rating on Applied Blockchain, highlighting the nearing completion of a high-performance computing lease with a major hyperscaler, which is currently 98% finalized. These are among the recent developments for Applied Blockchain, which continues to make steady progress on current projects.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Applied Blockchain's financial performance and market position. The company's market capitalization stands at $1.68 billion, reflecting investor confidence in its growth potential. This optimism is supported by the company's impressive revenue growth of 198.92% over the last twelve months, with quarterly revenue growth of 98.29% in Q4 2024.
However, profitability remains a challenge for Applied Blockchain. The company reported a negative operating income of $81.23 million and a negative operating income margin of -49.06% over the last twelve months. This aligns with an InvestingPro Tip suggesting that analysts do not anticipate the company to be profitable this year.
Despite these challenges, the stock has shown strong performance, with a 147.49% price return over the past six months. This robust growth is consistent with another InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Applied Blockchain, providing a deeper understanding of the company's financial health and market position.
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