Applied Digital (APLD 6.61%) builds power-heavy data center campuses that hyperscalers need to train and run advanced artificial intelligence (AI) models.
Image source: Getty Images.
Shares of Applied Digital are up over 67% so far in 2026. Doubling from its current share price of $40.94 (as of June 8) by the end of 2026 appears ambitious. However, Applied Digital's contracted revenue base shows investors a path that makes such a scenario possible.
Applied Digital now operates one of the few 100-megawatt AI data centers that use advanced liquid-cooling technology to manage the heat generated by power-intensive AI chips. This has positioned the company as a credible player with demonstrated ability to deliver large-scale, high-density AI infrastructure.
While Applied Digital's first 100-megawatt building at Polaris Forge 1 is already operational, the second 150-megawatt building is expected to come online during 2026. CoreWeave is the key customer at Polaris Forge 1, with 400 megawatts of contracted AI data center capacity.
At Polaris Forge 2 campus, Applied Digital expects the initial capacity under its 200-megawatt hyperscaler lease to come online in calendar 2026, with full capacity anticipated by early 2027. Hence, Applied Digital is now evolving from a speculative data center developer to a revenue-earning artificial intelligence (AI) infrastructure platform.
Applied Digital's contracted capacity is also impressive. It contracted nearly 1.2 gigawatts of AI data center capacity across its four AI Factory campuses by May 2026. Those campuses are supported by about 1.67 gigawatts of total grid power.
In June 2026, Applied Digital strengthened its backlog by signing a new 15-year lease worth $5.2 billion with a U.S.-based hyperscaler covering 210 megawatts of AI data-center capacity. Applied Digital now has $36 billion in contracted base-term lease revenue, which could increase to $86 billion if all renewal options are exercised. Since U.S.-based investment-grade hyperscalers account for 70% of contracted capacity, the backlog is also of high quality.
However, Applied Digital reported a net loss of $100.9 million and exited the third quarter of fiscal 2026 (ending Feb. 28) with $2.7 billion of debt.
For Applied Digital's share price to double from $40.94, the company's market capitalization would need to rise from about $11.7 billion to roughly $23.4 billion.
Analysts expect Applied Digital's revenues to be close to $500 million in calendar year 2026. At the current market capitalization of about $11.7 billion, the stock already trades at roughly 23.4 times expected calendar 2026 sales. If the market cap doubles to about $23.4 billion, Applied Digital would trade at nearly 46.8 times expected 2026 sales. That looks expensive if investors focus only on near-term revenue.
However, Wall Street does not appear to be valuing Applied Digital based on near-term revenues. The company's $36 billion of contracted base-term lease revenue, when spread over the initial 15-year lease terms, translates into an annual contracted revenue opportunity of about $2.4 billion. A $23.4 billion market value would equal roughly 9.75 times that annualized contracted lease revenue base.
While still not cheap, it becomes more reasonable if investors start viewing Applied Digital as a prominent AI infrastructure player with long-term hyperscaler-backed revenue.
Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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Applied Digital can emerge as a winning artificial intelligence (AI) infrastructure stock in 2026 if it keeps turning contracted capacity into real revenue.
