Applied Digital’s AI Pivot: $5 Stock to Big Winner

Applied Digital’s journey is a case study in corporate agility. As highlighted by commentator Lee Jackson in a discussion with Doug McIntyre, the company originally operated in the crowded and eventually cooling cryptocurrency mining space. Recognizing the shifting technological landscape, management made a decisive strategic pivot, redirecting its resources and expertise toward the booming fields of artificial intelligence and data center operations. This move has proven prescient, transforming the company’s fundamental prospects almost overnight. The shift involved repurposing its existing infrastructure—a ‘big campus’ designed for high-performance computing—to host the immense computational demands of AI and cloud computing, positioning APLD at the heart of a technological revolution.

The catalyst for investor recognition of this transformation was the announcement of a landmark partnership. Applied Digital secured a monumental agreement with CoreWeave, a leading specialized GPU cloud provider, valued at approximately $11 billion in revenue over a five-to-seven-year period. This deal is not merely a contract; it is a powerful validation of Applied Digital’s new business model and technical capabilities. It provides immense revenue visibility and firmly establishes the company as a serious player in the infrastructure layer supporting the AI boom, a sector where demand currently far outstrips supply.

Perhaps the most significant vote of confidence in Applied Digital’s new direction comes from an industry titan: Nvidia (NVDA). According to the analysis, Nvidia itself holds a substantial position of 7.7 million shares in APLD, making it one of only six or seven stocks in Nvidia’s investment portfolio. This stake, which was maintained through the latest reporting quarter, signals that the leading enabler of the AI revolution sees long-term value and strategic alignment in Applied Digital’s operations. It adds a layer of credibility that is difficult to overstate, suggesting that APLD is not just a speculative story but a company with tangible assets and a viable future in the AI ecosystem.

This fundamental optimism has translated directly into explosive market performance. After being pitched on financial shows earlier in the year at around $5-$6 per share, APLD stock quickly ascended into the low teens, experienced a healthy pullback, and then, fueled by the CoreWeave news, ‘has just taken off.’ The stock’s 30% surge from its April lows dramatically outpaces the S&P 500’s 14% year-to-date gain, highlighting its status as a high-beta play on the AI theme. The recent 20% single-session jump underscores the intense investor interest and momentum behind the name.

For investors, Applied Digital presents a clear proposition: a way to gain leveraged exposure to the AI infrastructure build-out without paying Nvidia’s current premium, which sits above $183 per share. As Lee Jackson noted, APLD offers ‘another play’ for those who want ‘to be in the game.’ The company is often grouped with other successful, earlier-stage AI picks like SoundHound (SOUN), which also saw significant gains after securing commercial deals. The advice from analysts is to focus on such ‘real companies with real futures’ rather than speculative penny stocks, emphasizing quality even within the aggressive growth segment.

However, the commentary strikes a crucial note of caution alongside the optimism. The dramatic rally means the stock is now approaching its all-time high resistance level around $27.50. While a breakthrough above this point could theoretically open the path for further gains as there are ‘no seller or holders at levels above,’ the sheer magnitude of the move suggests a near-term ‘breather’ or ‘fade’ is likely. Analysts explicitly advise more aggressive traders to ‘take some profits’ given the substantial retracement from the April lows. The recommendation is to consider waiting for a pullback to establish new positions, balancing the compelling long-term narrative with the realities of short-term market volatility. The story of Applied Digital is powerful, but prudent risk management remains paramount.