Applied Digital is expected to outperform Wall Street’s expectations when it announces its fiscal 2026 Q2 results on January 7. After an impressive 215% rise in 2025, the data center specialist is well-positioned to benefit from the rapidly growing demand for artificial intelligence (AI) infrastructure. The company’s innovative approach to designing and operating specialized data centers for high-performance computing (HPC) has significantly boosted its revenue, which saw an 84% surge to $64 million in the first quarter of fiscal 2026.
An important contributor to this growth has been the company’s contract with CoreWeave, which recognized $26.3 million from the fit-out of its data center at Polaris Forge One in North Dakota. As of the first fiscal quarter, Applied Digital has already completed 100 megawatts (MW) of the hosting capacity for CoreWeave. The lease deals with CoreWeave alone are projected to bring in $11 billion over 15 years, underpinning strong revenue flow expected to commence as early as the end of 2025.
Looking ahead, analysts forecast Applied Digital’s revenue for the recently ended fiscal Q2 could break the expected 29% year-over-year growth, reaching more than $82.2 million. This strong performance could trigger a rally in its stock price, which is currently seen as expensive, trading at approximately 33 times sales. However, the company’s prospects in a booming sector support this valuation, as it continues to build out data centers and ramp up lease revenue.
While the stock has seen significant volatility, dropping 36% from its recent peak, the ongoing projects and robust growth expectations may make it an attractive buy for long-term investors. Analysts have suggested that if the company reaches the anticipated $970 million revenue target in the coming years and maintains a more favorable sales multiple, its market cap could increase substantially.
For investors considering purchasing stock in Applied Digital, it is important to weigh the potential risks against the promising growth outlook. Current sentiments reflect an optimistic expectation surrounding the company’s upcoming financial results, with many hoping for a positive impact on share prices. Despite not being listed among the top investment picks, Applied Digital’s trajectory appears promising as it continues to capitalize on the AI infrastructure demand.