Applied Digital Stock Analysis: Why APLD Led the Market in 2025 and What to Expect in 2026

Applied Digital Corporation (APLD) emerged as the top-performing internet services stock of 2025, delivering a remarkable 237% year-to-date return. This performance reflects a fundamental shift in how investors value AI infrastructure, with data center capacity becoming more valuable than the chips themselves. As the company transitions from construction to operations in 2026, investors are watching closely to see if Applied Digital can sustain its momentum.

What Does Applied Digital Do?

Applied Digital builds and operates high-performance data centers specifically designed for artificial intelligence workloads. The company has evolved from cryptocurrency mining hosting into what it calls "AI Superfactories"—facilities capable of housing the most power-dense computing clusters ever built. These data centers support rack densities exceeding 100 kilowatts, far beyond what traditional facilities can handle.

The business operates across three segments: Data Center Hosting for crypto miners, Cloud Services offering GPU-as-a-Service for enterprises, and HPC Hosting that designs purpose-built AI factories for hyperscale customers. The HPC Hosting segment drives the company's current valuation, targeting the $380-500 billion annual capital expenditure budgets of companies like Microsoft, Amazon, and Meta.

Why Did Applied Digital Stock Rise 237% in 2025?

The stock's exceptional performance stems from a fundamental realization in the AI industry: the constraint on AI growth has shifted from chip availability to physical infrastructure. Companies can acquire GPUs, but finding data centers with sufficient power and cooling capacity to run them has become the real bottleneck. Applied Digital positioned itself perfectly for this shift.

Three factors drove the re-rating. First, the company secured gigawatt-scale power allocations in North Dakota, where energy costs are low and grid capacity is abundant. Second, Applied Digital implemented proprietary liquid-cooling technologies that handle AI workloads three thousand times more efficiently than traditional air cooling. Third, management finalized multi-billion dollar lease agreements with investment-grade tenants, providing revenue visibility extending fifteen years into the future.

What Is the Polaris Forge Campus?

Polaris Forge represents Applied Digital's flagship AI data center development, spanning two major sites in North Dakota.

Polaris Forge 1 in Ellendale

The Ellendale campus totals 400 megawatts of capacity, anchored by a 15-year lease agreement with CoreWeave projected to generate $11 billion in revenue. The first 100 MW building was completed on time and on budget in late 2025. The second and third buildings, totaling 300 MW, are scheduled to become operational in mid-2026 and 2027 respectively. Management targets $500 million in annualized net operating income once this campus is fully operational.

Polaris Forge 2 in Harwood

The Harwood campus spans over 900 acres and is designed to reach 1 gigawatt of total capacity. In October 2025, Applied Digital announced a $5 billion lease agreement for the initial 200 MW with an unnamed investment-grade hyperscaler. This facility features liquid-first architecture from the ground up, achieving Power Usage Effectiveness of 1.18 and near-zero water consumption. The design leverages natural free cooling for 200 days annually, saving tenants an estimated $2.7 billion over 30 years compared to traditional colocation.

How Does Applied Digital Compare to Traditional Data Center REITs?

Traditional operators like Equinix and Digital Realty control the largest share of the global colocation market, with Equinix holding roughly 13% market share across 260+ facilities. However, these legacy players face significant challenges in the AI era. Most of their facilities were designed for enterprise cloud workloads where rack densities averaged 5-10 kilowatts and air cooling was sufficient.

Retrofitting older facilities for the 100+ kilowatt requirements of Nvidia Blackwell clusters is costly and physically complex. Applied Digital's ground-up approach allows immediate implementation of direct-to-chip liquid cooling. While Equinix focuses its 2026 strategy on distributed AI and edge infrastructure for low-latency inference, Applied Digital is winning the training market where massive capacity and low power costs are the primary decision drivers.

Who Are Applied Digital's Main Competitors?

The most direct competition comes from IREN (formerly Iris Energy) and Cipher Mining. Like Applied Digital, these companies began as Bitcoin miners and pivoted toward AI infrastructure to monetize their secured power allocations.

IREN secured a landmark $9.7 billion contract with Microsoft in November 2025 for 200 MW of capacity, featuring an 85% project EBITDA margin. The company's advantage lies in vertical integration, often owning its own substations and renewable energy sources. Cipher Mining entered long-term agreements with AWS for 300 MW, further validating the miners-turned-AI-landlords business model.

Applied Digital maintains competitive advantages through a larger development pipeline at 4 GW compared to IREN's 3 GW, and faster construction timelines that reduce the time from groundbreaking to ready-for-service to just 12-14 months.

What Is the Macquarie Partnership and Why Does It Matter?

The partnership with Macquarie Asset Management represents Applied Digital's most significant financial catalyst. This relationship has evolved into a $5 billion funding mechanism that effectively de-risks the company's infrastructure pipeline without excessive equity dilution.

The Macquarie facility operates as a preferred equity structure, investing up to $2.25 million for every megawatt leased at the North Dakota campuses. In December 2025, this was supplemented by a $100 million development loan facility supporting pre-lease activities. This arrangement allows Applied Digital to secure land and long-lead-time electrical equipment before final customer signatures, enabling faster movement than traditional REITs that wait for full lease commitments before breaking ground.

What Is the Revenue and Earnings Outlook for 2026?

Analysts project Applied Digital's revenue to reach $280-297 million in fiscal 2026, representing 30-38% growth. Fiscal 2027 estimates show even stronger acceleration at $541-553 million, reflecting 86-93% growth as the Polaris campuses reach operational maturity.

The company is expected to narrow its losses significantly, with earnings per share improving from negative $0.80 in fiscal 2025 to negative $0.31 in fiscal 2026. Analysts project the company will achieve positive EPS of $0.15 in fiscal 2027, marking a critical transition from cash-burning construction firm to high-margin recurring revenue engine. The company holds a $16 billion contracted backlog providing visibility into long-term cash flows.

Why Is Power Availability the Key Constraint for AI Growth?

Energy availability has replaced GPU silicon as the primary limiting factor for AI expansion. Industry estimates suggest AI-related infrastructure spending could reach $490 billion by 2026, with data centers projected to consume approaching 1,050 terawatt-hours of electricity globally—making them the fifth-largest electricity consumer worldwide.

This power constraint is driving a geographic reset in data center site selection. Premium markets like Northern Virginia and Silicon Valley face grid saturation and rising energy costs. North Dakota has become exceptionally attractive due to low-cost power and supportive regulatory environment. Applied Digital is also exploring behind-the-meter energy solutions, including a partnership with Babcock & Wilcox to bring 1 GW of natural gas power online faster than traditional utility timelines.

What Do Wall Street Analysts Think About APLD Stock?

Market sentiment remains overwhelmingly positive. As of late 2025, Applied Digital enjoys 100% Buy recommendations from the ten analysts covering the stock. Price targets range from $39 to $59, with an average target around $44, suggesting significant upside potential from current levels.

Institutional ownership stands at approximately 72% with 556 institutional holders. However, the stock also carries high short interest at roughly 33% of float, representing over 80 million shares. This creates potential for significant volatility in either direction. If the company meets 2026 construction milestones and begins recognizing lease revenue as projected, the high short interest could fuel a short squeeze pushing shares beyond analyst targets.

What Are the Key Risks for Applied Digital?

Several execution risks could affect the 2026 outlook. Construction and supply chain delays pose the most immediate threat, as the build-out depends on timely delivery of transformers, cooling components, and high-end GPUs. Any bottleneck could defer revenue and increase the company's burn rate.

Financing costs remain a concern with $687 million in total debt and heavy reliance on preferred equity arrangements. Tenant concentration also presents risk, as the majority of contracted revenue is tied to CoreWeave, which carries its own heavy debt load. Finally, technological obsolescence is possible—while data center shells have long lifespans, specific power and cooling architectures may require expensive upgrades as chip designs continue evolving.

The Bottom Line on Applied Digital

Applied Digital enters 2026 as a pivotal figure in digital infrastructure. Its 237% return in 2025 reflects successful positioning at the intersection of energy abundance and high-performance computing. The company is more agile than traditional REITs like Equinix and more asset-heavy than neoclouds like CoreWeave, creating a differentiated competitive position.

With gigawatt-scale power secured in North Dakota, pioneering liquid-cooling standards, and a $16 billion contracted backlog, Applied Digital has built a competitive moat that's difficult to replicate in an era of grid saturation. For investors comfortable with execution risk and premium valuations, Applied Digital offers exposure to the physical infrastructure layer that will power the next decade of artificial intelligence.

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