APLD's Energy Strategy Addresses Power Limits: Can it Drive Growth?

Applied Digital APLD is positioning itself ahead of one of the most critical bottlenecks in AI infrastructure - power availability. As hyperscaler demand for AI compute continues to accelerate, securing reliable and cost-effective energy has emerged as a defining competitive factor, and Applied Digital's geographic and operational choices appear increasingly deliberate in this context.

The company's North Dakota campuses offer a structural advantage through low cost, abundant energy, natural cooling and a supportive regulatory environment. These attributes are central to Applied Digital's ability to offer hyperscalers long-term cost efficiency across 15-year lease agreements. With 600 megawatts already under contract across two campuses and advanced discussions underway for approximately 900 megawatts across three additional sites, the energy foundation underpinning these commitments is increasingly consequential to the company's growth trajectory.

To address the broader power supply constraint, Applied Digital has partnered with Babcock & Wilcox Enterprises to explore near-term power generation using proven steam turbine technology. This approach could bring capacity online years ahead of traditional natural gas turbine procurement timelines, extending to 2031 or 2032. APLD has also led a $15 million investment in Corintis, whose advanced liquid cooling technology is designed to sustain energy efficiency as chip power density increases, a meaningful operational hedge as next-generation AI hardware scales.

However, both initiatives carry execution risk. Power projects depend on utility coordination and permitting timelines, while advanced cooling solutions must prove performance at scale. The Zacks Consensus Estimate for APLD's fiscal 2026 revenues is pegged at $340.24 million, up 57.88% year over year. Whether these strategies convert into operational megawatts and lease revenues will determine if that growth trajectory holds.

APLD Faces Stiff Competition

Applied Digital competes with Vertiv Holdings VRT and nVent Electric NVT in addressing power and thermal constraints across AI infrastructure. Vertiv Holdings supplies power delivery systems for high-density hyperscale deployments, while nVent Electric provides thermal management components across a broad base of data center operators. Both Vertiv Holdings and nVent Electric distribute risk across multiple customers through equipment sales, whereas Applied Digital concentrates capital and deployment risk within its own campus infrastructure.

VRT and NVT's vendor models require less capital per megawatt and offer greater customer flexibility. Applied Digital's returns, unlike those of Vertiv and nVent Electric, remain tied to how effectively contracted megawatts convert into operational lease revenues.

APLD’s Share Price Performance, Valuation & Estimates

Applied Digital shares have jumped 23.4% in the past six months, outperforming the broader Zacks Finance sector’s decline of 4.3% and the Zacks Financial-Miscellaneous Services industry’s decline of 29.4%.

APLD Stock’s Performance

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Applied Digital stock is trading at a forward 12-month price/sales of 15.36X compared with the broader sector’s 8.93X. APLD has a Value Score of F.

APLD’s Valuation

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The Zacks Consensus Estimate for fiscal 2026 loss is pegged at 26 cents per share, down by 10 cents over the past 60 days. Applied Digital reported a loss of 80 cents per share in the previous year.

Applied Digital Corporation Price and Consensus

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

APLD 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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