What Happened?
A number of stocks jumped in the afternoon session after sentiment in the tech space improved, fueled by significant developments from OpenAI.
OpenAI's valuation reportedly soared to $500 billion after a share sale, making it the world's most valuable startup and reinforcing investor confidence in the AI boom. Further fueling the rally, OpenAI announced partnerships with South Korean chipmakers SK Hynix and Samsung for its ambitious 'Stargate' project, a massive undertaking aimed at building AI infrastructure. This news created a positive ripple effect across the tech landscape, particularly for semiconductor companies, as it signals sustained, large-scale investment in the hardware that powers AI. The developments have bolstered the entire sector, pushing technology stocks to new records.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Enterprise Networking company Applied Digital (NASDAQ: APLD) jumped 6.8%. Is now the time to buy Applied Digital? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Lumen (NYSE: LUMN) jumped 4.3%. Is now the time to buy Lumen? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Cogent (NASDAQ: CCOI) jumped 4.3%. Is now the time to buy Cogent? Access our full analysis report here, it’s free.
- IT Services & Consulting company Grid Dynamics (NASDAQ: GDYN) jumped 5.9%. Is now the time to buy Grid Dynamics? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Pure Storage (NYSE: PSTG) jumped 2.6%. Is now the time to buy Pure Storage? Access our full analysis report here, it’s free.
Zooming In On Applied Digital (APLD)
Applied Digital’s shares are extremely volatile and have had 94 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 1.9% as the company continued to see positive momentum from major contracts announced earlier in the month for its artificial intelligence (AI) infrastructure business.
The stock's recent winning streak was fueled by expanded data center leases with cloud provider CoreWeave. These deals boosted Applied Digital's total contracted capacity to 400 megawatts and are expected to bring in about $11 billion in future lease revenue. This news highlighted the company's successful shift from crypto-focused data centers to what it calls “AI Factories.” The move positions Applied Digital to capitalize on the high demand for high-performance computing for AI. Investors also noted the company's connection to major players in the space, including its place in Nvidia's AI investment portfolio. The strong stock performance pushed its price above the average analyst 12-month target, signaling the market's growing confidence in its AI-focused strategy.
Applied Digital is up 244% since the beginning of the year, and at $26.83 per share, has set a new 52-week high. Investors who bought $1,000 worth of Applied Digital’s shares 5 years ago would now be looking at an investment worth $298,059.
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