Applied Digital, formerly known as Applied Blockchain, is successfully navigating its strategy to diversify away from cryptocurrency mining. The company’s shares witnessed a remarkable 17% surge in response to the announcement of a near-tripling of fiscal Q4 sales and securing its first artificial-intelligence (AI) clients.
Applied Digital Showcases Impressive Fiscal Q4 Performance
In the quarter ending in May, Applied Digital reported a substantial revenue boost, with hosting services generating $22 million compared to $7.5 million in the same period last year. The increased revenue is attributed to expanded capacity at its Ellendale, North Dakota facility and full utilization of its Jamestown, North Dakota facility.
The forthcoming Garden City, Texas facility will further support the company’s growth, considering the robust demand for its services.
Stepping into AI Terrain
While cryptocurrency mining still dominates the company’s revenue, Applied Digital is venturing into high-performance computing applications, particularly AI. The move aims to steer the company towards diversified revenue streams.
The company’s decision to focus on AI appears to be gaining traction as it announced contracts with AI customers, amounting to a potential $640 million over 36 months. Notably, one of its clients includes Character AI, backed by venture capital firm Andreessen Horowitz.
Further, the market has responded positively to these developments, enhancing investor confidence and contributing to the rise in Applied Digital’s share price
AI Revenue Projection
Applied Digital’s AI cloud service, operated through its subsidiary Sai Computing, is expected to yield revenue starting from the next quarter. Despite this promising move into the AI space, bitcoin mining will continue to contribute significantly to the company’s overall sales.
Moreover, the broader cryptocurrency mining sector has seen robust performance this year. For instance, New York City-based Bit Digital saw an impressive 627% increase in the first half, positioning itself as one of the best-performing small-cap stocks during this period.
Applied Digital’s Efforts to Diversify
Applied Digital’s proactive efforts to diversify its business model have yielded positive results, with a substantial increase in fiscal Q4 sales and the acquisition of AI clients. As the company continues to transition away from crypto mining, the market’s optimistic response signifies renewed confidence in Applied Digital’s future prospects.