Shares of Applied Digital (APLD 5.90%) fell on Wednesday, finishing down 5.8%. The drop came as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 0.5% and 1%, respectively.
The stock of the artificial intelligence (AI) data center company announced another multibillion-dollar deal today to provide data center capacity. The press release referred to the new customer as an "investment-grade hyperscaler," but didn't name the company directly.
Regardless, the as-yet-unnamed company has agreed to pay Applied Digital up to $5 billion over 15 years for 200 megawatts of capacity. This brings the company's leased capacity to a total of 600 megawatts across its two Polaris Forge sites.
President Trump may be considering new export restrictions
Despite the positive news, Applied Digital shares still fell, likely due to a report claiming the Trump administration is considering new export controls. Reuters reported the administration may soon implement strict restrictions on exports that involve "critical software." If the rumor proves true, it could impact Applied Digital and its customers.
There are risks
The opportunity for Applied Digital and other AI data center builders is massive, but the risks are just as big. The company is already carrying a heavy debt load and will need to raise more capital, either by taking on expensive loans or diluting shareholders through stock sales. If AI demand doesn't live up to the hype, things could go south fast.
Given these significant risks, I'd stay away from Applied Digital stock.
