Applied Digital Sees Revenue Spike as AI Fuels Data Center Use

JJohn July 24, 2023 3:51 PM

Applied Digital's projected yearly revenue outpaces market expectations due to increasing artificial intelligence (AI) usage, resulting in a surge in demand for their data center services. The company's shares rose 18% in early trading.

AI boosts Applied Digital's revenue projections

AI is making notable waves in the data service sector, with Applied Digital being no exception. The company recently updated its annual revenue forecast, predicting it to far exceed market expectations. This upward revision is primarily due to the heightened demand for its data center services, fueled by the growing popularity and use of AI. The positive news sent the company's shares 18% higher in early trading, indicating strong investor confidence.

Applied Digital's AI cloud service bags significant contracts

Earlier this year, Applied Digital launched its AI cloud service, catching the eye of several potential clients. Among these contracts, a standout is an agreement with Character A.I. worth up to $180 million. This demonstrates the significant financial impact AI-driven services can have and highlights the potential for Applied Digital's future profitability in the AI space.

Despite the overall positive outlook, Applied Digital did report some less encouraging news. The company's revenue for the three months leading up to May 31 was $22 million, which fell short of analysts' average estimate of $26.4 million. However, the company remains optimistic, pointing to the increasing demand for AI services bolstering their future earnings.

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