Shares of Applied Digital (APLD 3.77%) spiked on Tuesday, finishing the day up 14.3%. The dramatic move came as the S&P 500 gained 0.4% and the Nasdaq Composite rose 0.9%.
The artificial intelligence (AI) data center operator's stock is flying on news of Nvidia's investment in one of Applied Digital's closest partners.
NASDAQ: APLD
Key Data Points
Nvidia announces a major CoreWeave investment
Nvidia, the company at the very heart of the AI boom, announced late yesterday that it is expanding its backing of *CoreWeave*, the AI-first cloud computing operator. The chipmaker purchased $2 billion in Class A shares of CoreWeave at an average price of $87.20 per share as part of an expanded partnership.
Image source: Getty Images.
What that means for Applied Digital
As a key partner of CoreWeave, this was a big win for Applied Digital as well, helping alleviate fears that the heavily leveraged company's core customers won't be able to make good on their commitments.
While this certainly is a major sign of confidence from Nvidia, I still have serious doubts about CoreWeave's long-term sustainability -- and therefore, Applied Digital. I would still treat both of these stocks as speculative and remain cautious.
