Applied Digital Stock Jumps — and This Analyst Says the AI Trade Is Just ‘Catching Fire’

Applied Digital (NASDAQ:APLD) stock has come out of the gate strong in 2026, with shares up 29% year-to-date. A large chunk of that advance came Thursday, when the stock jumped about 7% after delivering fiscal second-quarter results that beat expectations on both the top and bottom lines.

Revenue nearly doubled from the year-ago period to $126.59 million, driven in part by the company’s first contribution from the 100-megawatt Polaris Forge 1 facility. On the earnings front, adjusted EPS came in at breakeven, outpacing expectations by a wide margin and reinforcing the sense that Applied Digital is beginning to translate expansion efforts into tangible financial results.

While the headline results are impressive, Roth analyst Darren Aftahi says the real story lies elsewhere, with the analyst believing the “commentary around demand trends and future lease agreements,” represents the key takeaway.

The company said it is in talks with hyperscalers, separate from its existing contracts, covering at least three additional sites and roughly 900MW. With initial diligence completed across all hyperscalers and development work already underway – supported by $45 million from the Macquarie development credit for land, site preparation, and initial equipment – Aftahi believes another hyperscaler lease is highly likely.

“The point is,” the analyst expounded, “we believe this initial spend and pre-lease funding is foreshadowing that another lease is coming for APLD (and perhaps at improving economics given market trends).”

This confidence also underpins Aftahi’s view that, with roughly 1.5GW-plus of capacity – including 600MW already signed and about 900MW under marketing – APLD is on a path toward more than $1 billion in annualized net operating income over the next five years, with additional upside from incremental power beyond that, including the PF1 and PF2 expansions.

If a third site and tenant are announced, APLD would then have three sites meeting at least the first three criteria of Aftahi’s core tenant framework: secured power and land, a formal lease, and an established supply chain, including the Babcock & Wilcox agreement that enables earlier power generation. Meanwhile, the PF1 site is already progressing toward steps four and five, covering financing and the large-scale deployment of AI factories.

As such, having completed diligence with multiple hyperscalers and secured Macquarie financing for both development and signed leases, the analyst believes APLD is “well on its way” to demonstrating a repeatable model for leasing, financing, building, and scaling data centers. It is this combination, says the analyst, that makes APLD one of his top picks.

“Thus,” Aftahi summed up, “while we believe there is a lot of power and execution for APLD to come from a long-term perspective, we now believe that investors more on the ‘catching fire’ side (event-driven) of the AI/HPC trade would do well to buy APLD with what we believe is a pending lease coming (that could involve a multi-site endeavor or at least optionality).”

That setup is enough for Aftahi to lift his price target to $58 from $56, implying upside of nearly 83% from current levels. His Buy rating remains unchanged. (To watch Aftahi’s track record, click here)

Aftahi’s take is by no means unique; in fact, all 11 other recent reviews are also positive, naturally all coalescing to a Strong Buy consensus rating. Going by the $47.5 average target, a year from now, investors will be pocketing returns of 51%. (See APLD stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.