On Wednesday, H.C. Wainwright increased the stock price target for Applied Blockchain Inc (NASDAQ: APLD) to $10.00 from the previous $5.00, while keeping a Buy rating on the stock. This adjustment comes following the company's announcement of significant revenue growth in August, as reported on October 9. Applied Blockchain's August revenues surged to $60.7 million, up from $43.3 million in the previous quarter ending in May.
The revenue increase is partly attributed to the company's cloud services, which brought in $25.9 million, an increase from May's $16.8 million. This boost is due to additional GPU clusters becoming operational. Applied Blockchain's 286MW North Dakota BTC facilities also saw a rise in earnings, generating $32.9 million in the August quarter, compared to $23.0 million in May.
The firm's focus on expanding its high performance computing (HPC) capabilities at the Ellendale, ND campus is proceeding on schedule. The construction progress and an approaching 100MW hyperscaler lease, which may include an option for an additional 300MW, have been noted as positive developments. The potential total capacity of 400MW is seen as a significant step for Applied Blockchain.
The near completion of this lease deal is believed to have facilitated a $160 million private placement on September 5, which included investments from Nvidia (NASDAQ:NVDA; not rated) and Related Companies, a private real estate investment firm. This investment led to a 132% increase in Applied Blockchain's stock from recent lows, which was a substantial outperformance compared to the Nasdaq's 7% gain during the same period.
In summary, H.C. Wainwright reaffirms its Buy rating for Applied Blockchain and raises its price target to $10, highlighting the company's strategic build-up to its 1.4GW power pipeline and its focus on HPC development.
In other recent news, Applied Digital reported a 67% revenue increase in its fiscal first quarter of 2025, reaching $60.7 million, primarily driven by the strong performance of their data center hosting and cloud services segments. Despite this surge, the company experienced an adjusted net loss of $21.6 million. Analysts from Lake Street Capital Markets, Craig-Hallum, and Needham have mentioned Applied Blockchain's swift progress on construction and its ability to secure leases.
Furthermore, the company is nearing the completion of a high-performance computing lease with a major hyperscaler, which is currently 98% finalized. This development was highlighted by analysts from both Needham and Craig-Hallum. In terms of executive changes, Saidal Mohmand has taken over as Chief Financial Officer, with David Rench transitioning to the role of Chief Administrative Officer.
These are recent developments for Applied Digital, which continues to make steady progress on its current projects and strategic investments, despite facing a net loss. The company's robust revenue growth and strong market demand for its upcoming GPU cluster deployments are notable highlights.
InvestingPro Insights
Applied Blockchain Inc's recent performance and strategic developments are further illuminated by InvestingPro data and tips. The company's market capitalization stands at $1.57 billion, reflecting investor confidence in its growth trajectory. This aligns with the significant revenue growth reported in August, as the company's revenue for the last twelve months reached $189.96 million, with an impressive year-over-year growth rate of 124.03%.
InvestingPro Tips highlight that analysts anticipate continued sales growth in the current year, supporting H.C. Wainwright's bullish outlook. Moreover, three analysts have revised their earnings upwards for the upcoming period, suggesting positive expectations for the company's financial performance.
However, investors should note that Applied Blockchain's stock generally trades with high price volatility, which is consistent with the 197.96% price return over the past six months. This volatility underscores the potential for both significant gains and risks in the short term.
For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide deeper insights into Applied Blockchain's financial health and market position.
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