Will Applied Digital's Pivot to AI Infrastructure Broaden Its Revenue Base?

Applied Digital APLD is deepening its strategic shift from blockchain hosting towards high-performance computing infrastructure designed for artificial intelligence(AI) workloads. This evolution signals a structural reorientation of its business model toward long-term, contract-based revenue streams and away from cyclical crypto-driven demand.

APLD’s growing presence across North Dakota anchors this transition. Its fully leased 400-megawatt Polaris Forge 1 campus represents over $11 billion in contracted lease value, offering multi-year visibility and validating Applied Digital’s technical and operational capabilities. Building on this foundation, APLD has commenced construction of Polaris Forge 2, a 300-MW AI-optimised facility near Harwood. The new campus is engineered for scalable expansion, positioning Applied Digital to serve hyperscalers seeking purpose-built, liquid-cooled capacity for next-generation AI systems. Together, these developments illustrate how APLD is transitioning into a key enabler of large-scale AI compute infrastructure.

However, the financial transition remains in progress. The Zacks Consensus Estimate for the second quarter fiscal 2026 revenue is pegged at $63.5 million, implying a 0.66% year-over-year decline as construction-driven income tapers and lease revenue begins to ramp. This moderation reflects a timing reset rather than weakness. As recurring contracts start contributing, Applied Digital’s earnings profile is expected to become more stable and margin-accretive. The company’s next phase hinges on disciplined execution — balancing capital efficiency, timely project delivery and deeper penetration across hyperscaler clients — to translate its AI infrastructure investments into durable, recurring growth.

APLD Faces Stiff Competition in the AI Infrastructure Space

Applied Digital competes with emerging and established players such as Riot PlatformsRIOT and EquinixEQIX in the fast-expanding AI data centre market. Riot Platforms is scaling beyond crypto mining with new high-performance computing facilities exceeding 1 gigawatt of planned capacity to support AI workloads. Equinix, meanwhile, operates over 260 global data centres, leveraging its xScale portfolio to serve hyperscalers seeking power-dense infrastructure. Both Riot Platforms and Equinix have scale and strong customer ecosystems, while Applied Digital’s strength lies in its purpose-built, liquid-cooled architecture and faster deployment timelines. These factors could help APLD compete more efficiently for AI-driven infrastructure demand.

APLD’s Share Price Performance, Valuation & Estimates

Applied Digital shares have skyrocketed 300.8% year to date, outperforming the broader Zacks Finance sector’s return of 12.4% and the Zacks Financial-Miscellaneous Services industry’s modest appreciation of 0.6%.

APLD Stock’s Performance

Applied Digital stock is overvalued, with a forward 12-month price/sales of 23.21X compared with the broader sector’s 9.26X. APLD has a Value Score of F.

APLD Valuation

The Zacks Consensus Estimate for the second-quarter fiscal 2026 loss is pegged at 11 cents per share, wider by a penny over the past 30 days. Applied Digital reported a loss of 66 cents per share in the year-ago quarter.

Applied Digital Corporation Price and Consensus

Applied Digital Corporation price-consensus-chart | Applied Digital Corporation Quote

Applied Digital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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