Why Applied Digital is a High-Conviction Buy in the AI-Driven Infrastructure Boom

The global economy is undergoing a transformation driven by artificial intelligence, with infrastructure forming the bedrock of this revolution. At the heart of this shift lies Applied Digital Corporation (APLD), a company uniquely positioned to capitalize on the explosive growth of the AI infrastructure market. With a 250% year-over-year revenue surge in Q2 2026, strategic partnerships with hyperscalers, and access to robust financing, APLD exemplifies the kind of business that thrives when structural demand outpaces supply. For investors seeking exposure to the AI boom, APLD represents a compelling case study in how to leverage market dynamics for long-term value creation.

Explosive Revenue Growth: A Structural Tailwind

Applied Digital's Q2 2026 results underscore its ability to harness the AI infrastructure boom. The company reported revenue of $126.6 million, a 250% increase compared to the same period in 2025. This growth was driven by its High-Performance Computing (HPC) Hosting Business, which generated $85 million in revenue, including $73 million from tenant fit-out services for CoreWeave at its Polaris Forge 1 campus.

The Data Center Hosting Business also contributed $41.6 million, reflecting a 15% year-over-year increase. These figures highlight APLD's dual strength in both capital-intensive infrastructure development and recurring revenue streams from hyperscalers.

A $400B+ Market: Hyperscalers Fuel Structural Demand

The AI infrastructure market is expanding at an unprecedented pace. Hyperscalers such as Microsoft, Amazon, and Google are projected to invest nearly $350 billion in AI data centers in 2025 alone. This spending is part of a broader trend: semiconductor companies achieved over $400 billion in combined sales in 2025, driven largely by AI-related growth. Google, for instance, raised its FY2025 capital expenditure guidance to $91–$93 billion, while Amazon aims for $125 billion in full-year capex. These figures reflect a structural shift in corporate priorities, with AI infrastructure becoming a critical asset class. APLD's focus on AI and HPC aligns perfectly with this demand, positioning it to benefit from the sector's secular growth.

Strategic Partnerships: Locking in Long-Term Value

APLD's partnerships with hyperscalers are a cornerstone of its growth strategy. The company secured a 15-year lease with CoreWeave for 400 megawatts (MW) of capacity at Polaris Forge 1, generating $11 billion in prospective revenue. A second 15-year lease with an unnamed U.S.-based investment-grade hyperscaler for 200 MW of AI/HPC capacity at Polaris Forge 2 adds $5 billion in revenue. Together, these agreements bring total leased capacity to 600 MW and prospective lease revenue to $16 billion. Such long-term, high-margin contracts provide APLD with a stable revenue base while insulating it from short-term market volatility.

Operating Income Potential: A Path to $1 Billion+

While APLD has not explicitly projected $1 billion in operating income, its financial trajectory suggests a clear path to achieving this milestone. The company aims for an annualized net operating income run rate of $1 billion within five years. Analysts project 2026 revenues to reach $297.3 million, with further acceleration expected in 2027 as AI campuses become fully operational. APLD's recent financing strength- including $2.35 billion in senior secured notes and $900 million drawn from a preferred equity facility with Macquarie Asset Management-enables it to scale operations while retaining significant equity ownership. This capital structure supports a transition from growth-stage volatility to a mature, cash-generative business model.

Financing Strength: Scaling Without Dilution

APLD's ability to secure $2.35 billion in private senior secured notes and access a $900 million preferred equity facility underscores its credibility in capital markets. These arrangements allow the company to fund its 750 MW development pipeline without over-leveraging or diluting existing shareholders. The Polaris Forge 1 campus, for example, completed its first 100 MW facility on time and on budget, with construction progressing on the remaining 300 MW. Such disciplined execution, combined with access to non-recourse financing, positions APLD to scale efficiently in a capital-intensive industry.

Conclusion: A High-Conviction Buy for the AI Era

Applied Digital's 250% revenue growth, strategic partnerships, and access to $16 billion in prospective lease revenue make it a standout in the AI infrastructure sector. The company's alignment with a $400B+ market, driven by hyperscaler capex, ensures that its growth is not cyclical but structural. While operating income projections remain aspirational, the path to $1 billion in annualized NOI is supported by long-term contracts, disciplined financing, and a clear development pipeline. For investors seeking to capitalize on the AI revolution, APLD offers a rare combination of explosive growth, financial strength, and long-term visibility.