What Happened?
Shares of digital infrastructure provider Applied Digital (NASDAQ: APLD) jumped 7% in the afternoon session after investors continued to cheer the company's major artificial intelligence (AI) infrastructure contract announced the previous day, supported by positive sector-wide news.
The stock's momentum is largely a continuation from the previous day's news that a new lease agreement with CoreWeave brought Applied Digital's total anticipated contracted lease revenue to approximately $11 billion. This highlights the company's successful pivot to powering AI technologies. Bolstering investor confidence, the broader AI and data center market saw positive developments. Oracle's recent blockbuster deal with OpenAI and Super Micro Computer's announcement that it is shipping products with Nvidia's high-demand Blackwell chips signal a strong spending environment for AI infrastructure.
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What Is The Market Telling Us
Applied Digital’s shares are extremely volatile and have had 97 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 about 23 hours ago when the stock gained 0.7% on the news that the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation. The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
Applied Digital is up 136% since the beginning of the year, and at $18.42 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 $306,922.
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