Jan 23, 2026 (PRISM News via COMTEX) --
Applied Digital (NASDAQ: APLD) has demonstrated significant stock market activity, with shares rising nearly 300% over the past year. Despite this impressive performance, the stock has experienced recent volatility, trading below its 52-week high. This fluctuation follows the company’s fiscal-second-quarter report, which detailed a net loss of $19 million. However, this figure represents a substantial improvement from the prior year. For investors with a long-term perspective, looking beyond these short-term movements is crucial, as the company’s growth narrative is only beginning.
The Foundation of AI Growth
Applied Digital operates at the core of the rapidly expanding artificial intelligence sector by designing, constructing, and managing data centers. The demand for AI-specific workloads in these facilities is projected to increase significantly. Consequently, the industry anticipates the addition of 124 gigawatts (GW) of new AI data center capacity between 2025 and 2030. This trend indicates a sustained need for Applied Digital’s specialized services.
Furthermore, the company’s business model is designed for long-term revenue generation. It secures long-term lease agreements with clients, including hyperscalers and neocloud companies, before providing fit-out services at its data center campuses. This strategy ensures a steady stream of income from both the construction and operation of these facilities.
A Strong Contract and Revenue Pipeline
Applied Digital has already leased 600 megawatts (MW) of capacity at its two developing campuses in North Dakota. These contracts are projected to generate approximately $16 billion in lease revenue over the next 15 years, in addition to fit-out revenue. The company has already initiated this revenue stream by bringing its first 100 MW data center online.
The investment required for this initial 100 MW facility was over $1 billion. Extrapolating this cost suggests a total construction expenditure of over $6 billion for the full 600 MW. The potential lease revenue significantly outweighs this initial capital outlay. Moreover, the company’s management is focused on accelerating construction timelines and reducing costs through modular designs and prefabricated components.
Future Expansion and Market Position
Looking ahead, Applied Digital plans to increase its total data center capacity to 5 gigawatts (GW) within the next five years. The company is already developing three new data center campuses and has secured land or utility agreements for 4.3 GW of capacity. This extensive pipeline demonstrates a clear path for substantial growth.
Although the stock currently trades at a high valuation of 33 times sales, this premium is supported by its strong growth prospects. The data center market is characterized by demand that substantially exceeds supply. Projections indicate an average supply deficit of 10 GW over the next three years. This imbalance positions Applied Digital to secure additional contracts for designing and deploying new data centers.
The financial model is compelling. The anticipated $15 billion in lease revenue from the 600 MW of leased capacity translates to about $25 million in revenue per MW. In contrast, the construction cost per MW ranges from $11 million to $13 million. This favorable ratio suggests a strong potential for long-term profitability. Therefore, investors should consider the underlying fundamentals and long-term growth trajectory of Applied Digital, as it plays a pivotal role in the expansion of AI infrastructure.
The post Applied Digital: Long-Term AI Data Center Potential appeared first on PRISM MarketView.
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