Applied Digital beat Wall Street estimates for first-quarter revenue on Monday, as rapidly growing generative artificial intelligence (AI) technology boosted demand for the company’s data center services.
Shares of the company rose 13.5% in early trading.
Generative AI requires high-processing data centers to train large language models powering chatbots like ChatGPT.
CEO Wes Cummins said in a statement that the company was finalizing details for its Garden City facility.
Analysts said the delay in the opening of its Garden City facility in Texas could affect the company’s AI cloud segment. Moreover, Applied Digital also said that it did not recognize any revenue from the facility for the first quarter.
Applied Digital reported revenue of $36.3 million for the quarter ended Aug. 31, compared with analysts’ average estimate of $33.8 million, according to LSEG data.
Net loss for the reported quarter widened to $9.2 million, from $4.5 million a year ago. For the full-year fiscal 2024, the company reaffirmed its revenue outlook of $385 million to $405 million.
Applied Digital said it ordered 34,000 graphics processing units (GPUs) for its cloud services business. It received and deployed an initial production cluster of 1,024 GPUs in the quarter ended August 31.
GPUs have proven to be widely adopted technology to train AI models due to their processing capabilities. Reuters