Why APLD Stock Is Rallying This Week

The shares of Applied Digital (APLD) advanced more than 7% this week after the firm disclosed that Australian bank Macquarie had agreed to invest as much as $5 billion in its high performance computing (HPC) data center business.

The Details About Macquarie’s Investment in APLD

The Australian bank will plough as much as $900 million into Applied Digital’s HPC data-center facility in North Dakota. Additionally, Macquarie will be able to invest up to another $4.1 billion in the HPC data centers that APLD builds going forward.

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Under the deal, Macquarie will obtain “a perpetual preferred and 15% common equity interest” in APLD’s HPC business. As a result, Applied Digital will retain an 85% stake in its HPC assets.

APLD’s Assessment of the Deal

According to the data-center developer, Macquarie’s investment leaves APLD poised “to firmly establish itself as a top-tier HPC data center designer, builder and operator in the U.S.”

APLD noted that the “proprietary design” of its HPC data centers enables its customers “to run advanced AI workloads for both training and inference.”

While we acknowledge the potential of APLD, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.