The artificial intelligence (AI) boom is now entering a new phase. Instead of focusing solely on advanced chips or AI models, hyperscalers, cloud providers, and enterprise customers are increasingly investing in reducing bottlenecks via AI-optimized data center capacity, equipped with high power density and advanced cooling systems.
Applied Digital (APLD +8.49%) is one AI infrastructure player riding this AI wave, and it has the potential to deliver exceptional returns in the long run.
Image source: Getty Images.
Demand visibility
Applied Digital has already contracted nearly 600 megawatts of data center capacity across its Polaris Forge 1 and Polaris Forge 2 campuses in North Dakota for roughly $16 billion in prospective lease revenue over the next 15 years. Around 400 megawatts of capacity at Polaris Forge 1 has been leased to CoreWeave, while 200 megawatts of capacity at Polaris Forge 2 is leased to an unnamed "investment-grade" hyperscaler. This exceptional visibility into demand has improved the company's revenue and cash flow predictability.
NASDAQ: APLD
Key Data Points
Applied Digital has designed Polaris Forge 1 and Polaris Forge 2 campuses with significant room to expand, with each site capable of scaling to at least 1 gigawatt of total capacity and even up to 2 gigawatts or more, with expansion tied to the availability of power and infrastructure. The company has also started work on Delta Forge 1, a 430-megawatt AI data center campus. This highlights the company's confidence in continued data center demand and its ability to execute at scale.
Robust financials
Applied Digital's recent financials are impressive. In the second quarter of fiscal 2026 (ending Nov. 30, 2025), revenue soared 250% year-over-year to $126.6 million. The average Wall Street estimate calls for revenue to rise to about $346.7 million in fiscal 2026 and roughly $546 million in fiscal 2027.
Considering all these tailwinds, Applied Digital seems a smart buy now. While getting $1,000 to $1 million would take a 1,000% return, I think it's possible with Applied Digital stock.
