Is Applied Digital (APLD) a Buy for 2026 Amid AI Infrastructure Tailwinds?

The AI infrastructure boom is reshaping the global tech landscape, and Applied Digital (NASDAQ: APLD) has emerged as a compelling player in this high-growth sector. With a 250% year-over-year revenue surge in Q2 2026, a $1 billion net operating income (NOI) target within five years, and recent analyst upgrades, the company is attracting significant investor attention. This analysis evaluates APLD's strategic positioning in the AI data center market, its near-term financial catalysts, and whether it warrants a "Buy" rating for 2026.

Strategic Positioning in the AI Data Center Boom

Applied Digital's rapid ascent is driven by its focus on high-performance computing (HPC) and hyperscale data center hosting. The company's Polaris Forge 1 campus in North Dakota, now fully energized, has become a cornerstone of its growth. In Q2 2026, the HPC Hosting Business generated $85 million in revenue, including $73 million from tenant fit-out services and $12 million in rental income. This performance underscores the company's ability to capitalize on the surging demand for AI infrastructure, particularly from hyperscalers seeking to expand their computational capacity.

The strategic value of Polaris Forge 1 is further amplified by its 100 MW of energized capacity, which secured $12 million in partial-quarter lease revenue from CoreWeave. Meanwhile, the company has locked in a 15-year, 200 MW lease with an investment-grade hyperscaler for Polaris Forge 2, generating $5 billion in prospective revenue. These long-term contracts provide visibility and stability, critical for a capital-intensive industry.

Near-Term Financial Catalysts

Applied Digital's Q2 2026 results highlight its accelerating revenue growth and improving unit economics. Total revenue reached $126.6 million, a 250% increase compared to the same period in 2024. While the company reported a net loss of $31.2 million, adjusted EBITDA improved to $20.2 million, reflecting cost discipline and operational efficiency. Analysts have taken note: Roth Capital and Arete Research upgraded their price targets and initiated "Buy" ratings following the results, citing the company's strong contract pipeline and AI-driven demand.

A key catalyst for 2026 is the ramp-up of Polaris Forge 1's full operational capacity. Management projects an annualized NOI run rate of $500 million once the campus is fully leased, positioning the company to achieve its five-year $1 billion NOI target. This trajectory is supported by a $16 billion contracted backlog, including $11 billion from CoreWeave and $5 billion from another hyperscaler. The latter agreement, secured in December 2025, adds 600 MW of contracted capacity and reinforces APLD's role as a critical infrastructure provider for the AI era.

Balancing Risks and Rewards

Despite its momentum, Applied Digital faces near-term challenges. The company's GAAP net loss of $31.2 million in Q2 2026 reflects significant upfront costs for tenant fit-out services and infrastructure development. However, these investments are strategic, as they underpin long-term, high-margin lease revenue. The company's liquidity position-$2.35 billion in cash, cash equivalents, and restricted cash-provides a buffer to manage these costs while expanding its footprint.

Analysts remain optimistic about APLD's path to profitability. Earnings per share are projected to turn positive in fiscal 2027, with EPS expected to rise from -$0.80 in 2025 to $0.15 in 2027. This improvement hinges on the timely energization of Polaris Forge 2 and the execution of its $5 billion hyperscaler lease. Additionally, the company's planned spin-off of its cloud compute segment into ChronoScale-a joint venture with EKSO Bionics-could unlock further value by focusing on GPU-optimized AI infrastructure.

Conclusion: A Buy for 2026?

Applied Digital's strategic alignment with the AI infrastructure boom, coupled with its robust contract pipeline and improving financial metrics, makes it a compelling investment candidate for 2026. The 250% YoY revenue surge in Q2 2026, driven by Polaris Forge 1's energization, demonstrates the company's ability to scale rapidly. While the $1 billion NOI target is a five-year goal, the $500 million annualized run rate at Polaris Forge 1 suggests a clear path to achieving it. Analyst upgrades and a strong balance sheet further bolster confidence in APLD's ability to navigate near-term costs and deliver long-term value.

For investors seeking exposure to the AI infrastructure tailwinds, Applied Digital offers a high-conviction opportunity. However, caution is warranted around execution risks, particularly in meeting lease energization timelines. Given its current momentum and favorable industry dynamics, APLD merits a "Buy" rating for 2026.