Applied Digital Poised to Benefit from Neocloud Supercycle

Applied Digital (NASDAQ: APLD) is emerging as a key player in the AI data center market, driven by the rising demand for neocloud infrastructure. The company specializes in designing, constructing, and operating AI-optimized data centers for providers such as CoreWeave. As the AI boom accelerates, the need for GPU-powered facilities with high-speed connectivity and advanced cooling solutions has surged, creating a market supercycle. Neocloud providers like CoreWeave and Nebius are experiencing demand that far outpaces supply, with significant backlogs that could fuel long-term growth for Applied Digital and its partners. Currently, Applied Digital is building two data center campuses in North Dakota with a combined capacity of 700 megawatts (MW). Of this, 600 MW has already been leased, including 400 MW to CoreWeave for a 15-year term. Another hyperscaler has secured the remaining capacity under a similar agreement. The company has a potential $16 billion in lease revenue from these projects. In January 2026, Applied Digital announced the start of construction for a third AI data center in a southern U.S. state, initially capable of supporting 430 MW of capacity. The company's long-term roadmap includes building 4.3 gigawatts (GW) of AI data centers, leveraging its land holdings and power agreements. With Deloitte estimating U.S. AI data center power demand could reach 123 GW by 2035, Applied Digital is well-positioned to meet this growing need. Analysts anticipate strong growth for the company, supported by its expanding infrastructure and lease commitments. Management has also indicated confidence in surpassing a $1 billion net operating income target within five years. Investors are closely watching Applied Digital as it navigates the neocloud supercycle, with the stock having risen sharply in recent months.