12 Best Small Cap AI Stocks To Buy According to Hedge Funds

3. Applied Digital Corp. (NASDAQ:APLD)

Market Cap as of December 2: $2.23 billion

Number of Hedge Fund Holders: 26

Applied Digital Corp. (NASDAQ:APLD) is a leading provider of digital infrastructure solutions and cloud services, specializing in high-performance computing (HPC) and AI. It offers a range of services, including data center hosting, GPU computing, and HPC hosting, to support demanding applications like cryptocurrency mining and AI workloads.

The company is committed to expanding its high-performance cloud computing business, with a particular focus on powering AI applications. Its strategic investments in AI-driven solutions have fueled significant growth, as evidenced by the successful fulfillment of existing contracts and the pursuit of new opportunities. As of the end of the FQ1 2025, it had 6 AI clusters operational, demonstrating its commitment to providing scalable and powerful computing infrastructure.

Applied Digital Corp. (NASDAQ:APLD) is also amending the lease financing for its GPUs, which is expected to be finalized in the current quarter. This amendment will allow for the amortization of GPU value over its useful life, resulting in improved financial reporting and a more accurate reflection of the long-term economics of the business.

The recent investment round has significantly increased Applied Digital Corp.’s (NASDAQ:APLD) visibility in the market, attracting attention to its innovative cloud solutions. The company plans to deploy additional AI clusters starting in H2 of fiscal year 2025, solidifying its position as a leading provider of AI-powered cloud services.