Key Highlights
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Applied Digital’s fiscal Q2 2026 results may surpass Wall Street projections.
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The company’s lease income, alongside new contracts, is set to bolster its revenue significantly.
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While the stock might seem pricey now, a long-term perspective is crucial for investors.
Applied Digital (NASDAQ: APLD) had a remarkable 2025, seeing a 215% increase in stock value. This digital infrastructure firm continues to attract investors due to the rising demand for AI infrastructure.
As it capitalizes on the AI infrastructure surge, Applied Digital is focused on designing, constructing, and operating high-performance computing (HPC) data centers. As a result, both revenue and potential growth are advancing rapidly.
Some investors might be hesitant about purchasing Applied Digital shares post its strong 2025 performance. The stock currently trades at a high price and has experienced volatility, dropping around 36% from its 52-week peak in mid-October.
On the flip side, expectations are set for the company to regain traction following the release of its fiscal Q2 2026 financial results on January 7. Here’s why that might be the case.
Expectations for Applied Digital’s Results
Applied Digital has consistently outperformed Wall Street’s earnings predictions over the last four quarters, reporting smaller losses than anticipated. The primary driver of this success is the robust growth in sales.
For instance, in fiscal Q1 2026 (ending August 31, 2025), the company reported an 84% year-over-year revenue boost, reaching $64 million, which surpassed the consensus of $50 million. This growth was largely due to a $26.3 million revenue from CoreWeave, primarily for data center maintenance at its Polaris Forge One site in North Dakota.
The company also recently completed the first 100 megawatts (MW) of HPC hosting capacity for CoreWeave. More significantly, the lease agreements with CoreWeave and others hold substantial potential for profitability. At the end of Q1, CoreWeave had leased 400 MW of data center capacity, expected to generate about $11 billion in revenue over the length of a 15-year lease.
Lease revenue recognition is anticipated to commence by the end of 2025, as Applied Digital wraps up 100 MW of capacity for CoreWeave. Additionally, a $5 billion, 15-year lease to construct a 200 MW AI facility was signed with a hyperscaler in October 2025.
This information implies that Applied Digital’s revenue for the recently concluded fiscal second quarter could significantly exceed the anticipated 29% year-over-year rise to $82.2 million. Consequently, the company appears ready to surpass Wall Street’s expectations again on January 7, which could lead to a stock price rally.
Evaluating the Stock
Given the substantial rise in Applied Digital’s stock price in 2025, it’s currently trading at roughly 33 times sales. While this might seem steep, the company’s ability to consistently deliver better-than-expected growth justifies this valuation. Future growth is likely to continue as more data centers are developed and lease revenue starts flowing in.
Analysts share this optimistic view.
Assuming Applied Digital reaches the anticipated $970 million in sales in the coming years and trades at a moderate 10x sales, its market capitalization could hit around $9.7 billion, representing a 44% increase from its current market value. However, it might be unrealistic to expect such a low trading multiple given the anticipated strong growth.
This suggests that investing in this AI stock could be wise, especially as the share price may surge following the forthcoming earnings announcement in the new year.
Should You Consider Buying Applied Digital Stock Now?
Before making any investment in Applied Digital, it’s essential to keep a few things in mind:
According to Motley Fool Stock Advisor, there are other stocks deemed more favorable than Applied Digital right now, with the potential for noteworthy returns over the next few years.
When comparing investments over time, Netflix and Nvidia have both seen tremendous returns, showcasing the kind of growth some investors wish to capture.
The average return of Stock Advisor stands at 966%, dwarfed by the S&P 500’s 194%. Thus, engaging with a community like this may offer useful insights for retail investors.
