Applied Digital: Soaring High Thanks to New Major Contracts in the AI Sector

The shares of Applied Digital are experiencing a remarkable surge, propelling the stock by 6.6% in the morning trading session. The reason for this upswing is recent significant contract signings in the field of artificial intelligence (AI), which are further driving the positive momentum. The impressive rally marks the tenth consecutive day of gains, resulting in a cumulative return of 47% during this period. This increase was preceded by announcements of expanded data center leasing agreements with the cloud provider CoreWeave. Through these agreements, Applied Digital's total contracted capacity rose to 400 megawatts, which is expected to secure future lease revenues of approximately $11 billion. These developments underscore the company's strategic shift towards high-performance computing for AI and tap into opportunities in a booming market. The strong demand in the broader AI infrastructure sector also enhances Applied Digital's ties with industry heavyweights, as Nvidia has included the company in its portfolio of AI investments. Applied Digital is known to be extremely volatile, having recorded 95 movements over 5% in the past year. Against this backdrop, the market views the current news as significant but not as a fundamental change in the perception of the business model. Ten days ago, there was news about the last major price gain of 7%, which was also attributed to a significant AI infrastructure project. This underscores the successful pivot of Applied Digital toward strengthening AI technologies. The market for AI and data centers is showing positive developments, with Oracle involved in a groundbreaking contract with OpenAI and Super Micro Computer delivering products with Nvidia's coveted Blackwell chips. Since the beginning of the year, Applied Digital has gained 196% and reached a new 52-week high of $23.11 per share. Investors who purchased shares worth $1,000 five years ago now find themselves with an impressive investment value of $350,081. The transformative potential of generative AI for large corporations is becoming increasingly evident. Nvidia and AMD are trading near their all-time highs, yet a lesser-known but still profitable semiconductor company is also benefiting from the rise of AI.