Applied Digital Plunges 7.5%: What's Behind the Volatility as CoreWeave Leases Ignite?

Summary
• Applied Digital (APLD) reports Q4 revenue of $38.0M, missing estimates by 51.3%
• Non-GAAP EPS beats estimates by 66.7%, yet shares trade 7.5% below opening price
• $11B in AI data center leases with CoreWeave announced post-earnings

Applied Digital’s shares have plunged 7.5% intraday to $12.15, erasing a 25.3% post-earnings rally. The stock’s volatile move follows a mixed earnings report—beating on the bottom line but missing revenue estimates—and the revelation of $11B in AI data center leases with CoreWeave. With a 14.3% drop from its 52-week high and a 30-day support level at $10.05, the market is grappling with the company’s strategic pivot to AI leasing and its reliance on a single client.

Earnings Beat and $11B CoreWeave Leases Fail to Stabilize Shares
Applied Digital’s Q4 results showcased a 78.6% year-over-year improvement in non-GAAP EPS to $0.03, surpassing estimates by 66.7%. However, GAAP revenue of $38.0 million fell far short of the $79.4 million consensus, primarily due to the exclusion of cloud services revenue under GAAP rules. The company’s $11B in 15-year AI data center leases with CoreWeave—expanding to 400 MW of capacity—failed to reassure investors about its heavy reliance on a single client and $688.2M in debt. Analysts’ price target upgrades to $15–$16 contrasted with the market’s skepticism over execution risks and operational costs, which surged 33% year-over-year.

Data Center Sector Mixed as Digital Realty Dips -1.76%
The data center sector remains fragmented, with Digital Realty Trust (DLR) down 1.76% intraday despite its leadership in hyperscale leasing. Recent sector news highlights a $17B data center project in Virginia and Microsoft’s $75B Azure revenue for FY2025, but also underscores regulatory scrutiny over energy use and competition from legacy players. Applied Digital’s AI-focused model diverges from traditional REIT strategies, yet its 41.3% YoY revenue growth and $120.9M in cash reserves position it to capitalize on the AI infrastructure boom. However, its lack of diversification and debt load create a stark contrast with peers like CyrusOne, which recently secured a 190MW power deal.

Bullish Kline Pattern, Overbought RSI, and High-Leverage Puts Define APLD’s Options Playbook
• 200-day MA: $8.14 (below current price) • RSI: 73.86 (overbought) • MACD: 0.37 (bullish) • Bollinger Bands: $12.41 (upper), $10.43 (middle) • 30D support: $10.05–$10.13

APLD’s technicals suggest a short-term bullish trend within a long-term range. The RSI nearing overbought territory (73.86) and a MACD histogram above zero indicate momentum, but the stock’s 7.5% intraday drop has brought it closer to key support at $10.43. With the 30-day MA at $10.36 and 200D MA at $8.14, a break below $10.05 could trigger a retest of the 52-week low at $3.01. The options chain highlights two high-leverage puts for a bearish scenario:

• APLD20250808P12 (Put, $12 strike, 8/8 expiry): IV 89.53%, leverage ratio 20.87%, delta -0.44, theta -0.007, gamma 0.246, turnover $90,425
• APLD20250815P12 (Put, $12 strike, 8/15 expiry): IV 88.61%, leverage ratio 15.13%, delta -0.44, theta -0.011, gamma 0.181, turnover $34,438

APLD20250808P12 stands out for its 20.87% leverage ratio and 89.53% IV, offering significant downside exposure if the stock gaps below $12. A 5% downside to $11.55 would yield a put payoff of $0.45 per share. APLD20250815P12 provides a slightly lower leverage ratio (15.13%) but higher liquidity (turnover $34,438) and gamma (0.181), making it ideal for a mid-term bearish trade. Aggressive bears may consider APLD20250808P12 into a breakdown below $12.15.

Backtest Applied Digital Stock Performance
The backtest of APDL's performance after a -7% intraday plunge shows favorable results. The 3-Day win rate is 55.26%, the 10-Day win rate is 52.81%, and the 30-Day win rate is 58.44%. Additionally, the maximum return during the backtest period was 31.09%, which occurred on day 59, indicating that APDL has the potential for a strong recovery following a significant intraday decline.

APLD’s $11B CoreWeave Leases Signal Strategic Pivotal Moment—But Volatility Remains
Applied Digital’s $11B in AI data center leases with CoreWeave represents a strategic inflection point, but its 7.5% intraday drop underscores investor concerns over customer concentration and debt. The stock’s 30-day support at $10.05 and 52-week low of $3.01 remain critical levels to watch. Sector leader Digital Realty’s -1.76% decline highlights the sector’s mixed sentiment, but APLD’s AI-focused model could outperform if execution risks are mitigated. Traders should monitor the 200-day MA at $8.14 and 30D MA at $10.36 for directional clues. For a bearish bias, APLD20250808P12 offers high leverage if the stock breaks below $12.15.