Got $500? This Under-the-Radar AI Stock Could Be the Best Investment You Make All Year.

The proliferation of artificial intelligence (AI) has been a tailwind for several companies in recent years. From hardware manufacturers making critical data center components to software providers helping enterprises integrate generative AI into their day-to-day operations, AI adoption has accelerated the growth of companies involved in deploying this technology across various niches.

The good news is that AI adoption is still in its early stages. A UN Trade and Development (UNCTAD) report predicts that the global AI market could grow by a whopping 25x between 2023 and 2033, generating annual revenue of $4.8 trillion at the end of the forecast period. This massive growth will be fueled by the productivity gains AI can unlock for companies that adopt it.

As a result, the aggressive investments in AI data center infrastructure are unlikely to slow down any time soon. That's why, if you've $500 in investible cash right now after meeting your expenses, saving for difficult times, and clearing any high-interest debt, you can consider putting that money into shares of Applied Digital (NASDAQ: APLD).

Let's see why this underrated AI stock could be one of the best ways to play the AI boom in 2026 and beyond.

Image source: Getty Images.

Applied Digital is a pick-and-shovel AI company that's playing a critical role in the technology's growth

Applied Digital may not be a household name like other companies in the AI infrastructure ecosystem, with hundreds of billions of dollars in revenue backlog. However, it is quietly setting itself up for phenomenal growth in the long run by doing the unfashionable work of designing, building, and operating dedicated AI data centers for hyperscalers and neocloud providers.

Applied Digital's purpose-built AI data centers are leased by companies such as CoreWeave (NASDAQ: CRWV) and others, which rent the data center capacity it builds to customers for a fee. Applied Digital makes money by charging customers a fee to build data centers according to their specifications. And then, the company enters into long-term lease agreements with its customers to operate those data centers, thereby creating a lasting revenue stream.

Applied Digital is currently building 1 gigawatt (GW) of data center capacity across various locations. The company notes that it has contracted 90% of this capacity through long-term leases. Applied Digital has already completed a 100-megawatt (MW) data center for CoreWeave at one of its locations and has begun recognizing lease revenue from this site. CoreWeave is one of its most important customers, as the neocloud provider is going to generate $11 billion in lease revenue for Applied Digital over 15 years.

CoreWeave has leased 400 MW of capacity from Applied Digital. However, don't be surprised if it extends its relationship with the data center developer. That's because CoreWeave is getting huge contracts from customers such as OpenAI, Meta Platforms, Jane Street, Anthropic, and others, to provide them with data center computing capacity.

Its revenue backlog stood at a whopping $99.4 billion at the end of the previous quarter, growing by 284% from the year-ago period. As a result, CoreWeave is quickly adding new data centers. It was operating more than 1 GW of active data center capacity at the end of Q1, well above the 420 MW it was operating in the year-ago period. The company's booming backlog tells us why it is now looking to add more data center capacity.

This bodes well for Applied Digital. It should ideally get more business from CoreWeave to build new data centers, while also witnessing growth in its long-term lease revenue pipeline. What's more, Applied Digital is being approached by other hyperscalers to build data centers. The company recently announced that it has entered into a 15-year lease contract for 300 MW of data center capacity with an investment-grade hyperscaler.

This new contract takes Applied Digital's overall lease revenue pipeline to $23 billion for the next 15 years. Even better, Applied Digital notes that it can scale up its current active data center pipeline from 1 GW to 3.5 GW by expanding existing sites and by building new data centers at sites where it already has power supply agreements with utility providers.

So, Applied Digital seems poised to deliver outstanding long-term growth as it builds new data centers and starts generating lease revenue from them. This is precisely why analysts are expecting its revenue growth to take off.

Data by YCharts

The stock is expensive, but its phenomenal growth potential justifies the valuation

Applied Digital stock has jumped by an incredible 436% over the past year. Not surprisingly, it trades at an expensive 27 times sales. However, the chart above shows that its revenue growth is poised to accelerate nicely over the next couple of years.

Also, Applied Digital's long-term lease revenue pipeline and the potential expansion of its data center capacity suggest that it could sustain its impressive growth for years to come. That should help this tech stock to justify its expensive sales multiple and deliver more gains to investors. It is worth noting that all 12 analysts covering Applied Digital rate the stock a buy, and the points discussed above explain why.

So, investors looking to add a top AI infrastructure stock to their portfolios should consider taking a closer look at Applied Digital, as it could continue to quietly deliver big gains given its important role in the AI ecosystem.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.