Can Applied Digital (NASDAQ: APLD) Double in 2026? A Deep Dive into Infrastructure Growth and Lease Stability

The question of whether Applied Digital (APLD) can double in 2026 hinges on two critical factors: its ability to scale AI infrastructure and the durability of its lease-based revenue model. With 400 MW of secured capacity at its Polaris Forge 1 campus in North Dakota and $11 billion in contracted lease revenue, the company appears poised for a transformative year. However, its path to profitability and valuation sustainability remains fraught with challenges.

Secured Capacity and Long-Term Leases: A Foundation for Growth

Applied Digital's most compelling asset is its 400 MW of capacity at Polaris Forge 1, fully leased to CoreWeave, a leading AI hyperscaler. This represents a significant milestone in the company's transition from cryptocurrency-focused infrastructure to AI-driven data centers. The lease agreements, spanning 15 years, include $7 billion in initial revenue and an additional $4 billion from a recently exercised 150 MW option, bringing the total to $11 billion. CoreWeave's commitment to this capacity ensures a stable revenue stream, with the first 100 MW expected to generate lease revenue in late 2025 and the remaining 300 MW coming online in 2026 and 2027.

This long-term visibility contrasts sharply with the volatility of AI software plays like BigBear.ai (BBAI), which reported a 20% year-over-year revenue decline in Q3 2025 due to government contract delays. While BBAI's focus on defense and supply chain AI solutions offers niche opportunities, its lack of recurring revenue and exposure to budgetary uncertainties make it a riskier proposition compared to APLD's infrastructure model.

Revenue Surge and Analyst Projections: A 2026 Catalyst

Applied Digital's revenue trajectory has been nothing short of explosive. In Q4 2025, the company reported $38.0 million in revenue, a 41% year-over-year increase, while Q1 2026 saw a jump to $64.2 million, an 84% growth. Analysts project this momentum to continue, with 2026 revenue expected to reach $297.3 million-a 37.9% increase from 2025- driven by the phased online status of Polaris Forge 1's 400 MW.

The company's infrastructure pipeline further amplifies this potential. A second 150 MW building at Polaris Forge 1 is under construction, and a second campus, Polaris Forge 2, is set to break ground in 2026. These projects, supported by a $5 billion preferred equity facility with Macquarie Asset Management, minimize equity dilution while accelerating expansion. By 2027, Applied Digital aims to achieve an annualized net operating income (NOI) run rate of $500 million, with a $1 billion NOI target within five years.

Valuation Concerns and Profitability Challenges

Despite its growth, APLD's financials remain unprofitable. The company reported a net loss of $26.6 million in Q4 2025 and a negative return on equity (ROE) of -2.4%, according to Q4 2025 results. Its net margin of -28.81% underscores the heavy costs of infrastructure development. However, these metrics must be contextualized within the broader narrative of capital-intensive growth. Adjusted EBITDA of $1.0 million in Q4 2025 and a net debt/EBITDA ratio of -5.9x highlight the company's financial flexibility. Analysts remain optimistic, citing a potential 30.79% upside with a $39.50 price target.

In contrast, BigBear.ai's Q3 2025 net income of $2.5 million-a stark improvement from a $15.1 million loss in 2024- demonstrates the volatility of AI software models. While BBAI's $456.6 million in cash reserves provide some stability, its reliance on government contracts and software margins (22.4% in Q3 2025) pales against APLD's infrastructure-driven scale.

Conclusion: A High-Risk, High-Reward Proposition

Applied Digital's 400 MW secured capacity and $11 billion in long-term leases position it as a key player in the AI infrastructure boom. Its 2026 revenue surge, driven by phased capacity online and strategic financing, could justify a doubling in valuation. However, investors must weigh the risks of ongoing losses and heavy debt against the potential for sustained growth. For those seeking stability, APLD's lease-based model offers a clearer path than the speculative nature of AI software plays like BBAI.

The coming months will be pivotal. If CoreWeave's AI workloads meet expectations and Applied Digital executes its expansion without hiccups, the stock could indeed double. But the road to profitability remains long, and the market's appetite for high-growth tech plays will ultimately dictate its trajectory.