To The Moon

$Applied Digital(APLD)$ is poised to report 1Q fiscal 2026 earnings after the market closes on Oct 9. Analysts expect APLD to report an earnings per share (EPS) loss of $0.13, slightly narrower than the $0.15 loss reported in the same quarter last year. Revenue is projected to come in at $46.09 million, reflecting a significant 24.1% year-over-year decrease.

Option traders are pricing in a potential move of 14% in either direction following the earnings release. Investors may consider high-volatility options plays like straddles and strangles.

APLD Soars 266% YTD as AI Data Center Expansion

Applied Digital's stock is currently trading around $28.11 ahead of earnings, shares have gained 266% since the start of the year. The bullish sentiment surrounding APLD is largely fueled by its aggressive expansion into the AI data center market. The company's strategic moves, including a major lease agreement expansion with CoreWeave and the announcement of the Polaris Forge 2 data center, have captured market attention.

Adding further credibility to APLD's ambitions, Macquarie Group's $5 billion investment in the company's AI data centers has solidified its financial position and provided crucial capital for expansion. This investment not only validates APLD's business model but also signals confidence from a major institutional player.

APLD’s Stock Surge Meets Profitability Questions

However, beneath the surface of these positive developments lie some critical financial realities. Despite the soaring stock price, APLD has reported a net loss of $233.68 million over the last 12 months, with a loss per share of $1.16. This stark contrast between market enthusiasm and financial performance raises questions about the company's ability to translate its ambitious plans into sustainable profitability. The upcoming earnings release will be crucial in determining whether APLD can begin to bridge this gap.

The upcoming earnings release will be a pivotal moment for APLD. but more as far as guidance than the actuals of today. With sales growth of 18.65% expected in the current FY26, the big focus will be on FY27 expectations for 91.19% in growth. The markets will be closely watching for signs that the company is making progress towards profitability and effectively managing its expansion projects. Any indication of slowing growth, rising costs, or execution challenges could trigger a pull back.

Options Traders Anticipate a 14% Move

The expected move for APLD options expiring on Oct 10, 2025 (1 days) (w) is ±$3.93 (14.0%), with a price range of $24.17 - $32.04.

Call open interest expiring this Friday totals 51,915, while puts stand at 19,391 — indicating bullish tilt among options traders.

Option Strategy

1. Long Straddle

Structure: Buy ATM $28 CALL + ATM $28 PUT

$APLD Straddle 251010 28.0C/28.0P$

Key Metrics:

• Cost: ~$418 (Est.)

• Breakeven: Stock >$32.18 or <$23.82 (16% move required)

• Max Risk: $4.18 per straddle (premium paid)

  Source: Tiger Trade App

2. Long Strangle

Structure: Buy OTM $30 CALL + OTM $26 PUT

$APLD Strangle 251010 26.0P/30.0C$

Key Metrics:

• Cost: ~$250.5 (Est.)

• Breakeven: Stock >$32.5 or <$23.49 (16% move required)

• Max Risk: $2.50 per strangle.

Source: Tiger Trade App

Rationale:

• Lower upfront cost but demands an even larger move than the straddle.

• Viable only if anticipating extreme outlier volatility.