Why Applied Digital Stock Is Plummeting Today

Core Viewpoint - Applied Digital's stock is experiencing significant sell-off pressure, primarily due to broader market concerns regarding growth-dependent AI stocks and macroeconomic risks [1][2]. Group 1: Stock Performance - Applied Digital's share price fell by 10.8% as of 3 p.m. ET, having previously dropped as much as 18% during the trading session [1]. - The stock has declined over 10% in the last month, with a current market capitalization of approximately $1.8 billion, translating to a valuation of about 7 times this year's expected sales [5]. Group 2: Market Sentiment and Influences - Traders are selling off AI stocks as they focus on emerging macroeconomic risks, leading to a weakening bullish sentiment ahead of Nvidia's fourth-quarter report [2]. - Concerns are heightened by the Trump administration's plans to impose new tariffs on Canada and Mexico, which may exacerbate inflation fears and impact the tech sector [3]. Group 3: Nvidia's Impact - Nvidia's upcoming earnings report is critical for Applied Digital, as it is a significant investor in the company and a bellwether for the data center market and AI demand [4]. - There are worries that Nvidia may provide softer-than-expected guidance, particularly in light of reports suggesting Microsoft might be moderating its data center expansion strategy [6]. Group 4: Growth Metrics - Despite the recent pullback, Applied Digital's stock is still up by 99% over the past year, with a year-over-year sales growth of 51% reported last quarter, indicating a potential valuation premium [5][6].