The Neocloud Supercycle Is Here. This Growth Stock Could Be Its Biggest Winner.

The artificial intelligence (AI) boom has created the need for specialized data centers powered by graphics processing units (GPUs), which are better suited to run AI workloads such as training large language models (LLMs) and running inference applications.

These neoclouds don't just provide the latest and fastest GPUs; they also feature high-speed connectivity and specialized cooling solutions purpose-built for AI. As a result, the demand for neocloud AI infrastructure has gone through the roof. In fact, demand for neoclouds such as CoreWeave and Nebius significantly exceeds supply, suggesting the market is in the midst of a supercycle.

After all, both Nebius and CoreWeave are sitting on massive backlogs that are going to drive years of outstanding growth not just for them, but also for Applied Digital (NASDAQ: APLD). Let's look at the reasons why Applied Digital could become the biggest winner of the neocloud supercycle.

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Applied Digital is the pick-and-shovel play in the neocloud space

Neocloud providers and hyperscalers such as CoreWeave turn to Applied Digital for the design, construction, and operation of dedicated AI data centers. Applied Digital is currently constructing two data center campuses in North Dakota with a combined capacity of 700 megawatts (MW).

Importantly, Applied Digital has leased out 600 MW of the data center capacity that's currently under construction. CoreWeave has leased 400 MW of data center capacity from the company for 15 years. Another hyperscaler has leased the remaining capacity for a similar time frame. In all, Applied Digital currently has $16 billion in potential lease revenue across the two campuses it is currently constructing.

In January, the company announced that it had started construction of another AI data center facility in a southern U.S. state. Applied Digital notes that this facility can initially support 430 MW of data center capacity, which can be scaled up. Another important point to note is that Applied Digital has a long-term road map to build 4.3 gigawatts (GW) of AI data centers, based on the land it controls and the power agreements it has signed with utility companies.

Deloitte estimates that AI data center power demand could grow by over 30 times in the U.S. over the next decade, reaching 123 GW in 2035. Applied Digital, therefore, should find enough customers to build AI data centers for, putting the company in a terrific position to sustain its remarkable growth.

Applied Digital's ambitious growth should boost the stock

Applied Digital's lease revenue pipeline and the additional data center capacity that it can bring online explain why analysts are forecasting a solid surge in its growth.

Data by YCharts.

What's more, management noted on the January 2026 earnings call that it expects "to surpass our long-term goal of $1 billion in [net operating income] within five years." Additionally, the massive growth in AI data center demand over the next decade suggests that Applied Digital can continue to grow at healthy levels for a long time to come.

As such, investors looking to capitalize on the neocloud supercycle should consider buying this AI stock before it soars further, following a 350% surge over the past year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.