Why Applied Digital Stock Is Skyrocketing Today

Applied Digital (NASDAQ: APLD) stock is seeing huge gains in Friday's trading. The company's share price was up 12.7% as of 10:15 a.m. ET and had been up as much as 17.3% earlier in the day's trading.

Applied Digital's valuation is surging today after Nvidia's (NASDAQ: NVDA) holdings disclosure with the Securities and Exchange Commission (SEC) showed that the artificial intelligence (AI) hardware leader was still invested in the company. While Nvidia didn't buy any additional Applied Digital shares in Q4, it didn't sell any either -- and that says something, given other moves made by the company.

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Applied Digital stock surges as Nvidia maintains its position

Nvidia's stock holdings as of Dec. 31 were made public through a disclosure with the SEC today, and the company reported still owning roughly 7.7 million shares of Applied Digital stock. This represents a significant vote of confidence in the company, given that Nvidia moved to completely sell out of previous holdings in SoundHound AI and Serve Robotics in the quarter.

The AI leader also reduced its stake in Arm Holdings. Compared to other AI-related holdings that were in its portfolio, Nvidia appears to think that Applied Digital has superior prospects.

What's next for Applied Digital?

Applied Digital announced on Feb. 12 that it had secured $375 million from Sumitomo Mitsui Banking Corporation for its North Dakota data center facility. This news signals that the company is on track to continue ramping up its data center footprint and improving its ability to offer AI computation services for customers.

With its last quarterly report, Applied Digital reported a non-GAAP (adjusted) loss per share of $0.06. Meanwhile, revenue for the period came in at $63.87 million -- up roughly 51% year over year. Performance on sales and earnings fronts was significantly better than the average Wall Street target had called for, and continued investment support from Nvidia is a bullish signal that Applied Digital could have more wins on the horizon.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Serve Robotics. The Motley Fool has a disclosure policy.