We recently compiled a list of the 5 Stocks Jensen Huang’s Company is Betting On. In this article, we are going to take a look at where Applied Digital Corporation (NASDAQ:APLD) stands against the other stocks.
Nvidia has a reputation for identifying high-quality companies in their initial stages and betting on their success. Last year, the company participated in more funding rounds than any other company in the US, behind only Alphabet. In the past, it has invested in startups like OpenAI, Perplexity, and Mistral, so when the chipmaker puts its money in some company, people are bound to notice.
A similar occurrence happened when the firm filed its recent 13F report. There were some clear omissions and needless to say, the stock prices of those companies tanked as the market digested the news of divestment. For those still on the list, the stock price reacted positively.
As the Santa Clara-based chipmaker proceeds with these investments, there is also the threat of regulators increasing the scrutiny based on anti-competitive practices. The firm is already facing the threat of anti-competitive charges in France and at home, and the recent acquisition of Run:ai continues to be under scrutiny. It must be said, however, that these challenges do not necessarily have any negative impact on the companies that made it to the 13F.
We decided to take a look at the stocks still on the 13F filing and find out what’s attracting the chipmaker to these companies. Do they have a moat? Are they still worth buying for the average investor? Or have the stocks already rallied too much?
An overhead view of a large-scale data center with rows of servers and blinking lights.
Applied Digital Corporation (NASDAQ:APLD)
Applied Digital Corporation (NASDAQ:APLD) operates various infrastructure solutions related to AI and data centers in North America. The company operates through the following segments: Data Center Hosting Business, HPC Hosting Business, and Cloud Services Business. The company’s stock jumped 8% after the 13F filing came out and has been slowly inching further up since.
Applied Digital Corporation (NASDAQ:APLD) recently reported its fiscal second-quarter earnings and investors weren’t impressed by the widening losses and the debt conversion, even though it comfortably beat estimates. As investors digested the share dilution, the share price was struck another blow on DeepSeek AI Monday. Since then, it has slowly been moving higher.
The company is transitioning from operating data centers for crypto mining to serving hyperscalers. This is a massive growth opportunity. One company is close to signing the deal for a 100MW lease while another 300MW of capacity is likely to be taken up soon. This transition has kept the stock price depressed but that may not be the case for long now.
Overall APLD ranks 2nd on our list of the stocks Jensen Huang’s company is betting on. While we acknowledge the potential of APLD as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as 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.