Applied Digital (NASDAQ: APLD), a fast-growing provider of AI infrastructure, has reported a sharp acceleration in growth as demand for computing power surges. For its fiscal second quarter ended November 30, 2025, the company posted revenue of 126.6 million USD, up 250% year over year. Since rebranding from Applied Blockchain in November 2022 and repositioning itself as an AI infrastructure supplier, the stock has risen more than sixteenfold over the past three years.
The company’s rapid share price appreciation has prompted speculation about a possible stock split. However, analysts note that the current share price still appears moderate in absolute terms, and a split does not seem to be a near‑term priority. For investors, the more important issues are Applied Digital’s position in a high‑growth segment of the AI value chain and its ability to continuously secure large, long‑duration contracts.
The core driver of Applied Digital’s growth is its long-term relationships with hyperscale and AI‑focused customers. The company has disclosed several major agreements that together form a substantial order backlog.
These include two lease agreements with AI cloud leader CoreWeave, which are expected to generate a combined 11 billion USD in revenue over the life of the contracts. In addition, Applied Digital recently signed a 15‑year agreement with another unnamed U.S. high‑performance computing services provider, which is projected to contribute 5 billion USD in revenue. Taken together, these long-term contracts give the company an order backlog of roughly 16 billion USD, providing unusually high visibility into revenue growth over the coming years.
Applied Digital’s site selection for its data center infrastructure is a key part of its cost advantage. Its Polaris Forge campus in North Dakota illustrates this strategy. The facility benefits from the state’s position as having the second‑lowest energy prices in the United States, as well as a naturally cold climate that helps reduce cooling expenses.
These conditions allow the company to significantly lower its power and cooling costs compared with many traditional data center locations. Moreover, the company’s facilities are designed to support up to 400 megawatts of power capacity, well above conventional data center configurations. This higher capacity is better suited to serving dense clusters of high‑performance GPUs and other hardware required for large‑scale AI workloads.
Despite the strong growth outlook, Applied Digital faces notable risks that investors need to weigh. The company’s revenue is currently highly concentrated among a small number of large customers, increasing its exposure to contract or customer‑specific disruptions. Any change in spending plans or renegotiation by these key clients could have a material impact on its financial performance.
At the same time, the company is committing to heavy capital expenditure in order to expand capacity quickly. In the first half of its 2026 fiscal year alone, capital spending reached 801.5 million USD, already exceeding the total capex for the entire 2025 fiscal year. Applied Digital has yet to achieve profitability and is trading at roughly 33 times sales, indicating that the stock is not cheaply valued on traditional metrics. The combination of customer concentration, aggressive investment, and a high revenue multiple underscores the need for careful assessment of execution risk.
The company’s growth is unfolding against the backdrop of a global build‑out in AI‑related infrastructure. Worldwide spending on data center‑related investments reached an estimated 430 billion USD in 2024 and could exceed 1.1 trillion USD by 2029, according to industry projections. Within this “AI infrastructure arms race,” demand for high‑performance data center capacity is seen as having a high degree of visibility over the medium term.
Leveraging its low‑cost energy access and purpose‑built technical design, Applied Digital has established itself as one of the core suppliers positioned to benefit from this trend. Its ability to offer large‑scale, power‑dense facilities at relatively low operating cost has helped it win sizable, multi‑year commitments from AI‑focused customers.
For investors who are optimistic about the long‑term trajectory of AI computing demand, Applied Digital represents a relatively pure‑play exposure to AI infrastructure. The company’s sizeable backlog provides strong visibility into future revenue, while its geographic and cost advantages underpin its competitive positioning. These factors suggest it could continue to benefit as the industry expands.
Whether or not the company pursues a stock split is largely cosmetic and does not change its underlying business fundamentals or intrinsic value. The more critical question for investors is whether Applied Digital can sustain its growth, manage its capital intensity, and diversify its customer base while maintaining profitability prospects in an increasingly competitive AI infrastructure market.
