Applied Digital (NASDAQ: APLD) Surges 7.76% on Q1 Earnings, $11B CoreWeave Lease

Applied Digital (NASDAQ: APLD) surged 7.76% on Wednesday, extending its winning streak to six consecutive days with a cumulative gain of 38.32% over the period. The stock hit an intraday high of 14.38% and reached its highest level since October 2025, reflecting strong institutional and retail investor confidence in the AI infrastructure developer.

The rally follows robust financial results for the company’s fiscal first quarter of 2026. Revenue jumped 84% year-over-year to $64.2 million, driven by its AI-focused high-performance computing (HPC) segment, which accounted for 41% of total revenue. This shift from legacy cryptocurrency hosting to AI infrastructure has accelerated, with the HPC segment growing nearly fourfold compared to the prior year. Adjusted losses narrowed significantly, outperforming analyst expectations and signaling progress toward profitability.

Strategic partnerships have further solidified APLD’s market position. A 15-year, $11 billion lease agreement with CoreWeave for the full 400-megawatt capacity at the Polaris Forge 1 campus underscores demand for its purpose-built AI data centers. The company is also advancing the $3 billion Polaris Forge 2 project, which aims to secure 700 megawatts of capacity by 2027. These projects leverage low-cost renewable energy and proprietary cooling technologies, differentiating APLD from traditional colocation providers.

Capital infusion has supported APLD’s expansion. A $5 billion perpetual preferred equity facility with Macquarie Asset Management provided immediate liquidity, with $112.5 million already allocated to complete Polaris Forge 1. Additional financing of $200 million through preferred stock and $50 million for Polaris Forge 2 has enabled the company to accelerate its multi-gigawatt pipeline without dilutive equity. Analysts have raised price targets following these developments, with Needham doubling its estimate to $41.

Despite the momentum, challenges remain. The company’s reliance on CoreWeave for a majority of contracted revenue highlights customer concentration risks. Execution delays, cost overruns, or governance concerns could pressure the stock, which currently trades at a high multiple of forward revenue. Management’s focus on transitioning to high-margin recurring lease income and diversifying tenant base will be critical to sustaining growth and addressing valuation concerns in the coming quarters.