Inside APLD's AI pivot: How the 2026-2027 Lease Ramp Aid the Stock

Applied Digital APLD is rebuilding around high-performance compute hosting anchored by multi-year leases and a repeatable financing stack. APLD operates two segments: the legacy Data Center Hosting Business and the High-Performance Compute Hosting Business. The legacy segment runs two fully contracted North Dakota sites totaling about 286 megawatts. The HPC segment designs, builds and operates AI-focused facilities and is the primary growth engine. 

At Ellendale, the Polaris Forge 1 campus expanded to a fully leased 400 MW with a single tenant, CoreWeave CRWV. The first 100 MW is slated to recognize lease revenue toward late 2025, followed by 150 MW in mid-2026 and another 150 MW in 2027. Near Harwood, Polaris Forge 2 has broken ground. The initial 300 MW is expected online in 2026 with full 300 MW by 2027. A U.S. investment-grade hyperscaler has leased 200 MW and holds a right of first refusal on up to 800 MW across the 1 GW campus expansion potential. 

APLD is funding the build through asset-level structures meant to limit corporate dilution. In the first quarter of fiscal 2026, it drew $112.5 million from a Macquarie preferred equity facility for Polaris Forge 1, secured $50 million of equipment financing for Polaris Forge 2, and later raised additional preferred equity. Management targets a 12 to 14 month build cycle and notes 700 MW under construction across campuses. Design choices include direct-to-chip liquid cooling, a design PUE target of 1.18 and near-zero water use, leveraging more than 200 days of natural cooling in the Dakotas to speed delivery for power-dense AI workloads.

From Fit Out to Recurring Rent- Here’s How APLD Benefits

Near term, revenues are dominated by one-time, low-margin tenant fit-out tied to the first 100 MW at Ellendale. As buildings reach Ready for Service and become fully online, revenue recognition shifts to multi-year lease rent, which carries better economics than installation work. This transition should improve earnings visibility as staged ramps in 2026 and 2027 replace installation revenue with contracted rental streams. The legacy hosting operations remain fully utilized, providing continuity as HPC rent phases in. 

Applied Digital cites approximately $11 billion of anticipated contracted lease revenues at Polaris Forge 1 over roughly 15 years. Polaris Forge 2 represents about $5 billion of total contracted revenues over an estimated 15-year term with its anchor hyperscaler. While the customer base is concentrated, the long duration of these leases anchors the rental stream and supports a more durable earnings profile once the staged lease starts are underway.

The Zacks Consensus Estimate for fiscal 2026 revenues is expected to be $280.9 million, suggesting 30.4% growth from the figure reported in fiscal 2025. The consensus mark for loss is pegged at 31 cents per share, unchanged over the past 30 days. APLD reported a loss of 80 cents in fiscal 2025. 
 

Applied Digital Corporation Price and Consensus

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

Applied Digital shares have jumped 187.1% in a year, outperforming the broader Zacks Finance sector’s return of 16.6%.

APLD Faces Stiff Competition

Applied Digital faces competition from large-scale data center operators such as Equinix EQIX, which runs more than 260 global data centers and uses its xScale portfolio to serve hyperscalers seeking power-dense infrastructure. This underscores the importance of APLD’s speed and liquid-cooling design in AI-grade builds. 

In APLD’s legacy lane, Riot Platforms RIOT is expanding beyond crypto mining with new HPC facilities exceeding 1 gigawatt of planned capacity to support AI workloads, highlighting a crowded field pursuing similar demand. Execution and lease depth will be key differentiators.

Zacks Rank

Applied Digital currently has 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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