Shares of Applied Digital (APLD +2.70%) moved higher on Wednesday, finishing up 7.8%. The jump comes as the S&P 500 and the Nasdaq Composite gained 0.1% and 0.4%, respectively.
The artificial intelligence (AI) data center company's stock is getting a boost from news that a group of investors -- including BlackRock and Nvidia -- is purchasing a data center company for $40 billion.
Image source: Getty Images.
A collection of investment firms and AI heavy-hitters has agreed to purchase Aligned Data Centers in what is the largest deal yet in the white-hot industry. Larry Fink, CEO of BlackRock, said that the investment will "further our goal of delivering the infrastructure necessary to power the future of AI, while offering our clients attractive opportunities to participate in its growth."
NASDAQ: APLD
Key Data Points
More deals are likely to follow as the group intends to invest billions more.
Applied find itself overextended
The company is currently facing a significant debt burden and will need to borrow more money at high interest rates or dilute its shareholders by issuing additional stock to finance the construction of costly data centers. While the potential for Applied Digital and the data center market is substantial, the risks are also considerable. I wouldn't invest in Applied Digital stock at this point.
