Applied Digital (APLD) is experiencing a transformative phase as it transitions its growing AI infrastructure portfolio from development to revenue generation. The company’s Polaris Forge1 facility has started operations, and several new campuses are currently under construction. This progression marks a critical opportunity for APLD to leverage its infrastructure momentum to achieve sustained revenue growth through 2026, particularly within the competitive hyperscale data center market.
The larger industry landscape is proving supportive of aggressive expansion efforts. Hyperscale operators are reportedly investing around $350 billion annually in AI infrastructure. Despite this surge, the availability of GPU-ready data centers capable of handling advanced workloads is still limited. This supply-demand disparity creates advantageous conditions for developers capable of scaling power-dense facilities. Notably, the availability of data centers has become a significant bottleneck in AI deployment, overshadowing GPU acquisition challenges.
APLD’s extensive infrastructure pipeline positions the organization well to meet this demand. The Polaris Forge 1 campus, which includes a substantial 400-megawatt lease with CoreWeave valued at approximately $11 billion over the course of 15 years, is now operational, with further buildings nearing completion. The company anticipates that once fully operational, this campus could yield approximately $500 million in annual net operating income. Additionally, the construction of the Polaris Forge 2 campus has commenced, with an initial capacity of 300 megawatts, supported by Macquarie financing.
With a robust 4-gigawatt active development pipeline, APLD is also engaged in negotiations for two new sites with additional hyperscalers. The company’s innovative cooling technology, which aims for a power usage effectiveness of 1.18 while minimizing water usage, enhances operational efficiency in line with sustainability goals. The projected revenues for fiscal 2026 are estimated to reach $280.9 million, reflecting a year-over-year growth rate of nearly 27%.
However, challenges remain as APLD navigates simultaneous scaling across various sites. The timing of lease agreements for Polaris Forge 2, adherence to construction timelines for the 700 megawatts under development, and the conversion rate of completed facilities into revenue-generating operations are all critical factors that will dictate the effectiveness of APLD’s infrastructure strategy by 2026.
In the competitive landscape, APLD faces rising challenges from firms like Riot Platforms (RIOT) and Equinix (EQIX). Riot Platforms is shifting its focus from blockchain hosting to high-density computing, using its Texas power infrastructure to pursue hyperscaler contracts akin to those sought by APLD. In contrast, Equinix capitalizes on its global scale and established relationships to enhance its capabilities, retrofitting existing data centers for AI workloads while simultaneously expanding its purpose-built capacity.
In terms of stock performance, APLD shares have surged by 212.6% over the past six months, significantly outperforming the broader Zacks Finance sector, which registered a return of 9.3%. However, the company’s shares are considered overvalued, with a forward price-to-sales ratio of 19.26 compared to the sector’s 9.08. Currently, the Zacks Consensus Estimate for the company’s fiscal 2026 loss remains at 31 cents per share.
Overall, while the road ahead poses challenges for APLD, its strategic positioning within the AI infrastructure market and the increasing demand for data center resources drives positivity about potential growth and revenue enhancement opportunities in the years to come.