After the market closed on July 27, Applied Digital's stock climbed more than 6%, fueled by a blockbuster fourth-quarter earnings report and an eye-catching $20 billion order backlog from a major hyperscale client. The surge pushed shares past $26, reflecting strong investor confidence.

The company posted revenue of $258.7 million for the quarter, astonishingly up 581% year over year and nearly two and a half times higher than the $104.3 million Wall Street was expecting. This explosive growth stems from booming demand for AI infrastructure and hyperscale computing power, areas where Applied Digital is rapidly expanding its footprint.

Not only did Applied Digital beat revenue estimates, but it also flipped the script on profitability. Adjusted earnings per share came in at $0.04, a notable turnaround from analysts’ forecasted loss of $0.19 per share. The adjusted EBITDA climbed to $42.35 million, outperforming projections by over 40%, while the operating margin improved significantly to 1.2%.

A Massive Backlog and What It Means

The headline figure grabbing headlines is the $20 billion multi-year backlog linked to a hyperscale customer. This backlog secures long-term revenue streams, a rare level of visibility for a data center operator still in buildout mode. CEO Wes Cummins highlighted this milestone as validation of their strategic approach to scale the company sustainably over time.

This backlog will bankroll ongoing infrastructure investments and should provide a steady earnings foundation as Applied Digital’s HPC hosting business ramps up operations. The company recently began services at its Polaris Forge 1 HPC data center campus, including $270 million in tenant fit-out services.

Wall Street is bullish, maintaining a Strong Buy consensus with an average price target of $71.50 implying potential upside of over 170% from current levels. Analysts expect revenue growth to moderate but remain solid, forecasting a 59.2% increase over the next year despite cautious EPS estimates reflecting heavy capital spending.

This content is for informational purposes and does not constitute financial advice.