Nvidia Sells Entire Stake in Applied Digital
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 13 2026
0mins
Source: NASDAQ.COM
- Equity Sale Warning: Nvidia sold its entire 7.7 million shares in Applied Digital for approximately $177 million in Q4 2025, a move interpreted as a warning regarding the company's future prospects, potentially impacting its stock performance.
- Revenue Growth Potential: Applied Digital's revenue surged from $8.5 million in fiscal 2022 to $215.5 million in fiscal 2025, yet the high customer concentration, with 93% of revenue from CoreWeave, poses risks to future growth.
- Strategic Restructuring Plan: Applied Digital plans to spin off its cloud computing business and merge it with EKSO Bionics Holdings, which may throttle near-term revenue growth but aims to stabilize margins and enhance long-term competitiveness.
- Market Outlook: Despite a market cap of $7.7 billion and projected revenue growth to $1.05 billion by fiscal 2028, the company's deep unprofitability and delayed profitability expectations necessitate cautious evaluation of its long-term investment value.
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Analyst Views on APLD
Wall Street analysts forecast APLD stock price to rise
10 Analyst Rating
10 Buy
0 Hold
0 Sell
Strong Buy
Current: 47.860
Low
36.00
Averages
52.22
High
99.00
Current: 47.860
Low
36.00
Averages
52.22
High
99.00
About APLD
Applied Digital Corporation is a designer, builder, and operator of sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads. The Company’s segments include data center hosting (Data Center Hosting Business) and high-performance compute hosting (HPC Hosting Business). The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. Customer-owned hardware is installed in its facilities, and the Company provides operational and maintenance services for a fixed fee. Its facilities include a 106 megawatt (MW) facility in Jamestown and a 180 MW facility in Ellendale, North Dakota. The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and infrastructures to provide services to customers. Its HPC data center is located at its Polaris Forge 1 campus with 100 MW capacity.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Infrastructure Shortage: As technology companies race to deploy more AI systems, Applied Digital is emerging as a key infrastructure supplier, addressing the critical needs for electricity and data center capacity, thereby playing an important role in the AI ecosystem.
- Long-Term Agreement Growth: The company's recent signing of its second long-term hyperscaler agreement has pushed its contracted lease revenue into the tens of billions, which, despite generating only $127 million in revenue last quarter, highlights significant growth potential that attracts investor attention.
- Unique Market Positioning: By providing power, cooling, and data center capacity, Applied Digital aims to become an indispensable “landlord” for AI companies, allowing it to participate in the AI industry's boom without direct competition.
- Investor Interest Reasons: Despite facing execution and financing risks, the rising demand for infrastructure from Applied Digital is becoming increasingly apparent as AI spending accelerates and infrastructure shortages persist, making investors optimistic about its future prospects.
See More
Applied Digital: Key Supplier of AI Infrastructure
- Infrastructure Shortage: As technology companies race to deploy more AI systems, Applied Digital is positioning itself as a key infrastructure supplier to meet the growing demand for electricity and data center capacity, thereby securing a vital role in the AI ecosystem.
- Long-Term Agreement Growth: The company's recent signing of its second long-term hyperscaler agreement has pushed its contracted lease revenue into the tens of billions, which, despite its latest quarterly revenue of just $127 million, has garnered significant investor attention.
- Market Demand Outlook: The demand for AI infrastructure is rapidly increasing, and Applied Digital aims to lease power, cooling, and data center capacity to hyperscaler customers needing to deploy thousands of GPUs, highlighting its strategic importance as an infrastructure provider.
- Investment Risks and Opportunities: While Applied Digital faces execution and financing risks, the accelerating AI spending and persistent infrastructure shortages have led investors to remain optimistic about its future potential, especially in the context of ongoing advancements in AI technology.
See More
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- Fund Size and Background: As of the end of March, Situational Awareness reported approximately $4 billion in investments, and despite Aschenbrenner's lack of professional money management experience, the fund has garnered support from several prominent tech and investment figures, indicating its potential in the AI space.
- Diverse Investment Strategy: The fund invests not only in publicly traded companies expected to benefit from AI adoption but also backs startups like Anthropic, while also taking smaller short positions against industries that may be disrupted by AI, showcasing its adaptive market response capabilities.
- Market Risk Management: Situational Awareness disclosed sizable put-option positions linked to Nvidia, Broadcom, and others, indicating a proactive approach to hedge against overheated market risks while pursuing returns, ensuring the stability of its investment portfolio.
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See More
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- Long-Term Lease Revenue: Applied Digital is building 1 gigawatt of data center capacity, with 90% secured through long-term leases, creating a stable revenue stream, particularly with its partnership with CoreWeave expected to generate $11 billion in lease revenue over 15 years.
- Expanding Client Base: Applied Digital has a 400 MW lease agreement with CoreWeave, and as CoreWeave secures contracts with major clients like OpenAI, Applied Digital is likely to gain more data center construction business, further increasing its market share.
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- Long-Term Lease Contracts: The company has secured a 15-year lease agreement with CoreWeave, expected to generate $11 billion in lease revenue for Applied Digital, which not only strengthens its cash flow but also highlights its critical position in the AI infrastructure market.
- Data Center Expansion Plans: Applied Digital is currently building 1 GW of data center capacity, with 90% of this capacity locked in through long-term leases, and it aims to expand its active data center capacity to 3.5 GW to meet the growing market demand.
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See More
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- Infrastructure Shortage: As technology companies race to deploy more AI systems, Applied Digital is emerging as a key infrastructure supplier, addressing the critical needs for electricity and data center capacity, thereby playing an important role in the AI ecosystem.
- Long-Term Agreement Growth: The company's recent signing of its second long-term hyperscaler agreement has pushed its contracted lease revenue into the tens of billions, which, despite generating only $127 million in revenue last quarter, highlights significant growth potential that attracts investor attention.
- Unique Market Positioning: By providing power, cooling, and data center capacity, Applied Digital aims to become an indispensable “landlord” for AI companies, allowing it to participate in the AI industry's boom without direct competition.
- Investor Interest Reasons: Despite facing execution and financing risks, the rising demand for infrastructure from Applied Digital is becoming increasingly apparent as AI spending accelerates and infrastructure shortages persist, making investors optimistic about its future prospects.
See More
Applied Digital: Key Supplier of AI Infrastructure
- Infrastructure Shortage: As technology companies race to deploy more AI systems, Applied Digital is positioning itself as a key infrastructure supplier to meet the growing demand for electricity and data center capacity, thereby securing a vital role in the AI ecosystem.
- Long-Term Agreement Growth: The company's recent signing of its second long-term hyperscaler agreement has pushed its contracted lease revenue into the tens of billions, which, despite its latest quarterly revenue of just $127 million, has garnered significant investor attention.
- Market Demand Outlook: The demand for AI infrastructure is rapidly increasing, and Applied Digital aims to lease power, cooling, and data center capacity to hyperscaler customers needing to deploy thousands of GPUs, highlighting its strategic importance as an infrastructure provider.
- Investment Risks and Opportunities: While Applied Digital faces execution and financing risks, the accelerating AI spending and persistent infrastructure shortages have led investors to remain optimistic about its future potential, especially in the context of ongoing advancements in AI technology.
See More
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- Portfolio Highlight: Aschenbrenner's hedge fund, Situational Awareness, holds 12.4 million Class A shares of Nebius, representing a 5.6% stake, making it the fund's largest equity investment, reflecting strong confidence in the cloud computing sector.
- Fund Size and Background: As of the end of March, Situational Awareness reported approximately $4 billion in investments, and despite Aschenbrenner's lack of professional money management experience, the fund has garnered support from several prominent tech and investment figures, indicating its potential in the AI space.
- Diverse Investment Strategy: The fund invests not only in publicly traded companies expected to benefit from AI adoption but also backs startups like Anthropic, while also taking smaller short positions against industries that may be disrupted by AI, showcasing its adaptive market response capabilities.
- Market Risk Management: Situational Awareness disclosed sizable put-option positions linked to Nvidia, Broadcom, and others, indicating a proactive approach to hedge against overheated market risks while pursuing returns, ensuring the stability of its investment portfolio.
See More
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- Massive Investment: Applied Digital announced a $3.6 billion investment to develop its first AI Factory, Delta Forge 1, in Rapides Parish, Louisiana, aimed at supporting large-scale AI training and inference workloads, significantly enhancing the company's competitive edge in the AI infrastructure sector.
- Rapid Capacity Expansion: With this expansion, Applied Digital has surpassed 1.2 GW of contracted AI Factory capacity across four campuses, showcasing the company's rapid growth in the burgeoning AI infrastructure market.
- Positive Stock Reaction: Following the announcement of this major investment, Applied Digital's shares rose over 6% to approximately $48.14, reflecting investor optimism regarding the scale of the expansion, despite recent market volatility.
- Long-term Strategic Vision: Chairman and CEO Wes Cummins emphasized that this investment reflects the company's long-term vision of building high-performance digital infrastructure in underserved regions, aiming to capitalize on future growth potential.
See More
Applied Digital Positioned for Growth Amid AI Boom
- Massive Market Potential: A UNCTAD report predicts that the global AI market could grow 25 times from 2023 to 2033, reaching annual revenues of $4.8 trillion, which will significantly accelerate the growth of companies involved in AI infrastructure.
- Long-Term Lease Revenue: Applied Digital is building 1 gigawatt of data center capacity, with 90% secured through long-term leases, creating a stable revenue stream, particularly with its partnership with CoreWeave expected to generate $11 billion in lease revenue over 15 years.
- Expanding Client Base: Applied Digital has a 400 MW lease agreement with CoreWeave, and as CoreWeave secures contracts with major clients like OpenAI, Applied Digital is likely to gain more data center construction business, further increasing its market share.
- Optimistic Growth Outlook: Applied Digital's stock has surged 436% over the past year, and despite a high price-to-sales ratio of 27, its long-term lease revenue pipeline and data center expansion potential suggest strong future growth, with all analysts covering the stock rating it a buy.
See More
Applied Digital's Growth Potential in AI Data Centers
- Revenue Growth Outlook: Applied Digital's revenue backlog reached an impressive $99.4 billion at the end of the last quarter, reflecting a 284% year-over-year increase, indicating a rapidly rising demand in the AI data center sector that lays a solid foundation for future revenue growth.
- Long-Term Lease Contracts: The company has secured a 15-year lease agreement with CoreWeave, expected to generate $11 billion in lease revenue for Applied Digital, which not only strengthens its cash flow but also highlights its critical position in the AI infrastructure market.
- Data Center Expansion Plans: Applied Digital is currently building 1 GW of data center capacity, with 90% of this capacity locked in through long-term leases, and it aims to expand its active data center capacity to 3.5 GW to meet the growing market demand.
- Market Recognition Boost: Despite Applied Digital's high price-to-sales ratio of 27, its stock has surged 436% over the past year, with all 12 analysts covering the stock rating it a buy, reflecting strong market confidence in its growth potential.
See More
