Core Insights - The artificial intelligence (AI) sector is poised for significant transformation driven by robust demand from various end markets, including hyperscale automation, robotics, healthcare, energy, materials, financials, and cybersecurity over the next five years [1] Company Summaries Applied Digital Corp. (APLD) - APLD is a U.S. designer and operator of high-performance data centers specifically for AI and blockchain workloads, with a Zacks Rank of 2 (Buy) [5][12] - The global AI market is projected to reach $500 billion by 2027, indicating strong long-term growth potential for APLD [5] - APLD's data centers are designed to meet the high power density and cooling requirements of AI applications, which positions the company favorably as demand from hyperscalers increases [6] - The company has secured multi-year leases at its Ellendale campus, expanding from 250 MW to 400 MW, with anticipated lease revenue of approximately $11 billion over 15 years [7] - APLD has reduced its build timelines from 24 months to 12-14 months and is currently developing multiple campuses with 700 MW under construction [9] - The company has an expected revenue growth rate of 30.4% and earnings growth rate of 61.3% for the current year, with significant upward revisions in earnings estimates over the past 60 days [12] Lumentum Holdings Inc. (LITE) - LITE specializes in optical and photonic technologies for telecommunications and data centers, holding a Zacks Rank of 1 (Strong Buy) [17] - The company is focused on developing photonic solutions for AI applications, particularly in data centers, with offerings that include high-speed transceivers and lasers [15] - LITE has seen a surge in demand due to its collaboration with NVIDIA Corp. in developing silicon photonics for networking switches [16] - The expected revenue growth rate for LITE is 56% and earnings growth rate is over 100% for the current year, with positive revisions in earnings estimates noted over the last 60 days [17]