Roth Capital says billions in hyperscaler deals keep the AI data center story intact.
- Applied Digital stock had gained 37% as of the last close, partly lifted by a strong earnings report in January.
- Nvidia had invested in the firm in 2024 and sold that stake, worth $177 million, recently.
- Stocktwits sentiment for ALPD improved to ‘bearish’ from ‘extremely bearish.’
Applied Digital Corp. stock slumped by over 8% in overnight trading heading into Wednesday after Nvidia disclosed that it had exited its stake in the data center operator. However, one Wall Street analyst believes the dip may have created an attractive entry point for investors.
Roth Capital said the development does not change the fundamental business outlook for Applied Digital and reiterated its ‘Buy’ rating with a $58 price target. The research firm noted that significant developments have occurred since the Nvidia-led financing, including new co-location leases with CoreWeave and a major hyperscaler, with a third agreement imminent, according to Roth Capital’s investor note, as summarized by The Fly.
The decline is more due to "headline risk than any fundamental change" in Applied Digital's investment story, it said, adding that it was “buying shares” of APLD amid the stock tumble.
Retail Traders Get Less Bearish On APLD
On Stocktwits, the retail sentiment for APLD climbed to ‘bearish’ as of early Wednesday, from ‘extremely bearish’ the previous day, even as members debated whether to view the development as a loss of confidence in the company or stay invested and load up on shares.
A user said Nvidia’s APLD position was purchased by investment firms including Vanguard, Jane Street, and BlackRock. “The ‘Smart Money’ didn't just absorb the Nvidia dump; they fought over it,” this person said.
Recent APLD Updates
Last month, Applied Digital reported its fiscal second-quarter revenue above expectations and said it secured billions in long-term leases, including a $5 billion agreement with a U.S.-based hyperscaler for 200 MW at its Polaris Forge 2 campus in North Dakota.
In December, the company said it was spinning off its cloud business to merge with Ekso Bionics, forming an AI-focused company called ChronoScale. Applied Digital retained 97% ownership in the firm.
APLD stock is up 37% year to date, compared to the 2.2% drop in the tech-heavy Nasdaq 100 index.
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