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Applied Digital's growth is accelerating due to rising demand for its dedicated AI data centers.
Applied Digital plays a crucial role in the burgeoning artificial intelligence infrastructure sector, operating as a "pick-and-shovel" provider. The company specializes in designing, building, and managing dedicated AI data centers for major clients like CoreWeave and hyperscalers. The demand for Applied Digital's services is exceptionally high, reflected in its current contracts to develop and lease 1.4 gigawatts (GW) of data center capacity. These long-term, 15-year take-or-pay lease agreements represent a substantial $36 billion in contracted revenue, with a potential to reach $86 billion if customers exercise their renewal options. This figure is significant, especially when compared to the company's $611 million revenue in fiscal 2026. The accelerating growth is evident from its fiscal Q4 revenue, which soared fivefold year over year to $259 million, largely due to completed data center projects. Applied Digital is also actively seeking to expand its existing campuses and market an additional 1.7 GW of capacity, indicating a robust future pipeline for its services as AI infrastructure demand continues to grow.
Applied Digital exhibits strong potential to become a multibagger stock, despite current analyst predictions for a slower growth rate of 16% in fiscal 2027. Historical data shows that the company's revenue growth accelerated significantly in fiscal 2026's final quarter, and this trend is projected to continue from the following fiscal year. Given Applied Digital's proven capability to deliver data center capacity on schedule and within budget, there's a strong likelihood it could surpass Wall Street's conservative growth estimates. Should the company's revenue align with consensus projections, reaching $2.7 billion by fiscal 2029, its market capitalization could expand nearly threefold to $23.5 billion. This calculation is based on an assumed price-to-sales ratio of 8.7, which is consistent with the average for the U.S. tech sector. The substantial lease revenue pipeline further enhances its prospects for stronger-than-expected top-line growth and a potentially higher market valuation, making it an attractive long-term investment in the AI infrastructure boom.