Applied Digital Chairman and CEO Wes Cummins delivered a message on CNBC’s Squawk on the Street about the AI data center buildout. According to Cummins, historically only about 10% of large-scale industrial construction projects deliver on time, and he expects the AI infrastructure space to see “pretty significant delays through 2026 and 2027,” driven primarily by labor-force constraints that he says will only intensify from here.
That backdrop matters because hyperscaler demand has gone vertical. On the company’s most recent earnings call, Cummins noted that hyperscaler annual capital expenditure references jumped from approximately $400 billion to nearly $700 billion in just three months, with Cummins describing “intense pressure on power and infrastructure” as the defining feature of the cycle. If supply slips while demand surges, operators with capacity already online have outsized pricing and renewal leverage.
Applied Digital’s Edge: Modular Builds and Labor-Light Geographies
Cummins says Applied Digital (NASDAQ:APLD) is “not seeing delays personally” and is turning on another building this week. He attributes that to starting earlier than peers, back in 2023 and 2024, and “stubbing its toe” enough times to refine a modular, offsite-assembly approach. Mechanical, electrical, and plumbing components are pre-assembled into “lego brick”-style units that ship to site, reducing onsite headcount at exactly the moment when skilled construction labor is the binding constraint.
Geography matters too. Cummins says the company deliberately avoids labor-saturated markets like West Texas, instead building three campuses in North Dakota, one in Louisiana, and additional sites across southern states where labor competition is lower, and community support is stronger. He describes running five campuses at once using a “franchise model” that repeats a standardized design across regions. Federal wage data supports the underlying labor-tightness thesis: average hourly earnings rose to $37.53 in May 2026, with the unemployment rate stuck in a 4.3-4.4% band through the first five months of 2026.
The Numbers Behind the Thesis
The financials are starting to validate the operational story. In fiscal Q3 2026, Applied Digital posted revenue of $126.64 million, up 139.29% year over year and topping consensus by 61.37%. Adjusted EPS came in at $0.09 against a -$0.21 estimate, the fourth consecutive quarter of beating expectations. Adjusted EBITDA jumped to $44.14 million from $6.26 million a year earlier.
June brought another wave of commercial wins. A new 210 MW Delta Forge 2 lease with an investment-grade hyperscaler brought total contracted revenue to roughly $36 billion across five campuses, and Applied Digital priced $1.59 billion of 7.000% senior secured notes due 2031 to fund a 150 MW expansion at Polaris Forge 1. $APLD has been on a roll, with shares up 59.71% year to date and 270.83% over the trailing year, though the past week saw a 15.95% pullback.
What to Watch
Wall Street remains bullish, with an average analyst price target of $73.36 vs a current share price of $37.80. The stock has nine Buy plus two Strong Buy ratings, with no Holds or Sells.
Applied Digital has built a sizable backlog, yet roughly 70% of its contracted revenue is tied to CoreWeave or another single hyperscaler. If the industry-wide labor shortages Cummins expects materialize while Applied Digital continues bringing new capacity online on schedule, the company could widen its competitive advantage. If its own projects begin slipping, however, that same operating leverage could quickly work against it.
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