Applied Digital (APLD +5.08%) stock is surging higher in Friday's trading. The data center company's share price was up 13.6% as of 10:30 a.m. ET against the backdrop of a 0.6% decline for the S&P 500 index and a 0.7% pullback for the Nasdaq Composite index.
NASDAQ: APLD
Key Data Points
Applied Digital is posting big gains today following comments made by Nvidia CEO Jensen Huang. In a prerecorded interview, Huang said that investors had gotten the wrong conclusions about the DeepSeek artificial intelligence (AI) model that shook up the market last month.
Applied Digital stock jumps after Huang's comments bode well for data centers
The DeepSeek R-1 model caused massive sell-offs for Nvidia and other AI stocks last month because investors believed the software proved that powerful artificial intelligence (AI) software could be built and run with far less powerful hardware than previously anticipated. Applied Digital is a data center specialist focused on providing computing services for AI applications, so this had big implications for the company.
But Nvidia has now recovered most of the valuation losses it saw shortly after DeepSeek's R-1 debut, and the AI leader's CEO has addressed the situation. Huang says that there will be strong demand for Nvidia's chips and AI processing power even as AI training becomes more efficient.
What's next for Applied Digital?
Applied Digital is one of only a handful of companies that Nvidia directly invests in, and it should continue to benefit from rising demand for data center processing. The company is investing to expand its data center footprint, and it's already seeing some strong sales growth. Revenue rose 51% year over year to reach $63.9 million in the second quarter of its 2025 fiscal year, which ended Nov. 30.
With today's gains, Applied Digital is now valued at roughly $2.6 billion and is trading at approximately 10 times this year's expected sales. While the company is trading at a growth-dependent valuation, it's likely that the business will continue posting very strong sales momentum -- and it has a massive runway for long-term expansion.
