Why Applied Digital Stock Plummeted Today

Applied Digital (NASDAQ: APLD) stock got hit with another round of big sell-offs in Monday's trading. The company's share price dropped 14% by the time the market closed.

Tech stocks were rocked following some bearish news for Nvidia and other artificial intelligence (AI) stocks. Applied Digital stock often makes big moves in conjunction with valuation shifts for Nvidia, and its share price tumbled lower today.

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AI stocks tumble on Nvidia export-ban violation news

Nvidia and other AI stocks are seeing strong bearish momentum today following reports that the company's most advanced processors are still being sold into China despite export bans. The chips are reportedly included in servers that have been sold by third-party sellers, and it's possible that this could result in additional restrictions being put on advanced semiconductors and chip manufacturing equipment. The Trump administration was already said to be ramping up export restrictions on the category, and it wouldn't be surprising to see some action on that front in the not-too-distant future.

What's next for Applied Digital?

While Applied Digital operates its data centers in the U.S., its business and valuation could wind up facing headwinds related to trade wars and escalating tensions between the U.S. and China. Artificial intelligence has emerged as a key competitive battleground for the two countries, and it will almost certainly continue to be an axis that relations continue to revolve around.

In addition to geopolitical news, macroeconomic trends, and its own business results, Applied Digital will probably continue to see sympathetic trading with Nvidia stock. Nvidia is invested in the data center specialist, and Applied Digital also uses the AI hardware leader's processors to power its services.

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