Why Applied Digital (APLD) Is Down 15.0% After Nvidia Fully Exits Stake Amid New AI Leases

• In recent days, Applied Digital disclosed that Nvidia has fully exited its stake, even as the company pushes ahead with long-term AI and high-performance computing data center contracts, including multi-year leases at its Polaris Forge campus.
• This combination of a high-profile shareholder departure and expanding hyperscaler commitments highlights the tension between shifting investor confidence and the company’s growing role in AI infrastructure build-out.
• Next, we’ll examine how Nvidia’s complete exit as a shareholder could influence Applied Digital’s investment narrative built around long-term hyperscaler demand.

Invest in the nuclear renaissance through our list of 85 elite nuclear energy infrastructure plays powering the global AI revolution.

Applied Digital Investment Narrative Recap

To own Applied Digital, you have to believe its pivot from crypto hosting to long-term AI and high-performance computing leases will offset balance sheet strain and customer concentration. The key near term catalyst is continued execution on hyperscaler contracts at Polaris Forge, while the biggest risk remains high leverage and the need to keep data centers fully utilized. Nvidia’s exit hurts sentiment but does not directly change those fundamentals in the short term.

The most relevant recent development alongside Nvidia’s exit is Applied Digital’s continued build-out and leasing at the Polaris Forge campus, including multi-year agreements with CoreWeave and another major hyperscaler. These contracts underpin the AI infrastructure narrative that originally made Nvidia’s stake feel like third party validation, and they sit at the heart of both the bull case on recurring revenue and the bear case around heavy capital spending and debt.

Yet even with growing AI leases, investors should be aware that customer concentration risk could quickly become a problem if...

Read the full narrative on Applied Digital (it's free!)

Applied Digital's narrative projects $755.7 million revenue and $102.2 million earnings by 2028.

Uncover how Applied Digital's forecasts yield a $45.27 fair value, a 51% upside to its current price.

Exploring Other Perspectives

Before Nvidia’s exit, the most optimistic analysts were assuming revenue could reach about US$870,000,000 and earnings US$249,000,000 by 2028, which leans heavily on the same hyperscaler contracts that also heighten concentration risk. That is a much more optimistic story than the baseline view, and both could shift meaningfully as investors rethink Applied Digital’s reliance on a small group of large AI customers.

Explore 31 other fair value estimates on Applied Digital - why the stock might be worth less than half the current price!

Decide For Yourself

Don't just follow the ticker - dig into the data and build a conviction that's truly your own.

• A great starting point for your Applied Digital research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.
• Our free Applied Digital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Applied Digital's overall financial health at a glance.

Looking For Alternative Opportunities?

The market won't wait. These fast-moving stocks are hot now. Grab the list before they run:

• Find 56 companies with promising cash flow potential yet trading below their fair value.
• Rare earth metals are the new gold rush. Find out which 30 stocks are leading the charge.
• AI is about to change healthcare. These 27 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com