Nvidia Exit Creates Buying Opportunity in Applied Digital

Applied Digital Corp. stock plummeted over 8% in overnight trading after Nvidia disclosed it had exited its stake in the data center operator. However, Roth Capital believes this dip may have created an attractive entry point for investors.

Roth Capital said the development does not change the fundamental business outlook for Applied Digital and reiterated its 'Buy' rating with a $58 price target. The research firm noted that significant developments have occurred since the Nvidia-led financing, including new co-location leases with CoreWeave and a major hyperscaler, with a third agreement imminent.

The decline is more due to 'headline risk than any fundamental change' in Applied Digital's investment story, according to Roth Capital. The research firm added that it was 'buying shares' of APLD amid the stock tumble.