Applied Digital Corporation ( (APLD) ) has fallen by -26.44%. Read on to learn why.
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Applied Digital Corporation experienced a significant stock price drop of 26.44% over the past week, largely due to disappointing financial results and strategic shifts. The company’s Q3 2025 earnings report revealed a revenue increase of 22% year-over-year, reaching $52.9 million, but this fell short of analyst expectations of approximately $63 million. The shortfall was primarily due to a 7% decline in Data Center Hosting revenue and challenges in the Cloud Services segment, which saw a 220% revenue surge but faced technical difficulties.
In response to the financial results, Applied Digital’s board has decided to explore selling its Cloud Services division to focus on high-performance computing data centers. This strategic move is driven by customer friction with hyperscale data center clients and favorable market conditions following a competitor’s IPO. Despite these challenges, analysts have maintained a Buy rating on the stock, although they have lowered their price targets, citing the company’s potential for future growth and improved lease economics.
The company’s financial outlook is further complicated by increased interest expenses and margin compression in its Data Center Hosting business. However, Applied Digital has secured significant financial partnerships, including a potential $5 billion investment from Macquarie Asset Management and a $375 million financing arrangement with Sumitomo Mitsui Bank Corporation. These partnerships, along with ongoing construction at the Ellendale campus, are expected to support future growth, although the company must navigate its current challenges to fully capitalize on these opportunities.