Applied Digital Corp (APLD) is having a moment. The company crushed its second quarter of fiscal 2026, and according to Needham analyst John Todaro, it's now in serious talks with a major hyperscaler client that could transform its business.
The Numbers Look Good
Applied Digital reported revenues of $126.6 million and adjusted EBITDA of $20 million for the quarter. While those figures lined up with Needham's projections, Todaro noted they came in significantly ahead of broader market expectations. Sometimes meeting your own bar while clearing everyone else's is the best kind of beat.
Hyperscaler Deal in the Works
Here's where things get interesting. Applied Digital is in advanced discussions with an investment-grade hyperscaler for a lease covering three sites representing a combined 900MW of capacity. "The company is in advanced talks with an IG hyperscaler across 3 sites that represent in total 900MW with [the] possibility of a finalized lease in early 2026 (albeit the leases will likely be signed in phases)," Todaro explained.
That's substantial scale, though the phased approach suggests this deal will unfold gradually rather than all at once.
Execution and Expansion
Applied Digital also delivered on its existing commitments, bringing the first 100MW online for CoreWeave Inc (CRWV) right on schedule. Management sounded confident about hitting timelines for additional builds, which matters when you're in the infrastructure business.
The company is also moving forward with plans to spin out its cloud compute segment through a business combination with Ekso Bionics Holdings Inc (EKS). The resulting entity, ChronoScale, is expected to generate around $60 million in trailing twelve-month revenues.
Todaro maintained his Buy rating and $41 price target on Applied Digital. Shares closed up 8.05% at $31.94 on Thursday.
