Applied Digital Stock Surges as Nvidia Remains Invested

Applied Digital's stock sees significant gains as Nvidia maintains its position in the company. Strong revenue growth and ongoing support from Nvidia signal potential positive outlook for investors.

Date: 15-02-2025

AI Rating: 7

Stock Performance
Applied Digital's share price surged by 12.7% during Friday’s trading session, reflecting strong investor sentiment and positive market conditions. The high point of 17.3% indicates a robust interest in the stock, primarily driven by Nvidia's recent disclosures.

Nvidia's Confidence
Nvidia's continued investment in Applied Digital, with approximately 7.7 million shares held, is a notably positive indicator. This decision to maintain their stake, especially while divesting from other AI-related stocks, suggests Nvidia has confidence in Applied Digital’s future prospects. Such endorsements from a prominent leader in AI hardware typically bolster market confidence and can lead to stock price appreciation.

Revenue Growth
Applied Digital has reported revenue of $63.87 million, representing a substantial 51% increase year over year. The impressive growth rate strongly exceeds the average expectations set by market analysts, indicating the company is successfully capturing market demands in the growing AI sector. This affirmative trend in revenue could entice more investors, positively impacting stock performance.

Non-GAAP Loss
Despite the positive revenue growth, it’s important to note that Applied Digital reported a non-GAAP loss per share of $0.06. While losses are not inherently negative, they may raise some concerns regarding profitability in the short term. Investors generally look for a positive earnings trajectory, and while the revenue increase is encouraging, sustained losses could dampen long-term investment appeal. Nonetheless, with solid revenue growth and the backing of Nvidia, the company is on a potentially positive path.

Conclusion
The combination of Nvidia's backing, significant revenue growth, and continued investment in AI infrastructure presents a compelling story for Applied Digital. While there are concerns regarding immediate profitability indicated by the losses, the overall outlook appears positive, which could lead to further stock gains as market confidence builds.

Stocks: APLD NVDA