What Happened?
Shares of digital infrastructure provider Applied Digital (NASDAQ: APLD) fell 7.5% in the morning session after a drop in Bitcoin pulled down crypto-linked stocks. The move was part of a broader trend where investors turned defensive amid weaker regional sentiment and renewed global growth concerns. This shift led to profit-taking in technology stocks. The broader market saw investors sell riskier assets, such as AI and tech companies, and move funds into safer options like gold and government bonds. This negative sentiment weighed on major indexes and hit tech stocks particularly hard.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Applied Digital? Access our full analysis report here.
What Is The Market Telling Us
Applied Digital’s shares are extremely volatile and have had 91 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 22.2% on the news that the company reported third-quarter 2025 results that beat Wall Street's top and bottom-line estimates. Revenue for the quarter grew 84% year on year to $64.22 million, surpassing analyst forecasts by 17.6%. The company also posted a smaller-than-expected adjusted loss of $0.03 per share, which was significantly better than the consensus estimate for a loss of $0.16 per share. However, the results were mixed, as adjusted EBITDA fell short of expectations, and the company's operating margin worsened compared to the same period last year. Despite the underlying challenges with profitability and cash burn, investors appeared to focus on the strong revenue and earnings beat, sending the shares sharply higher.
Applied Digital is up 335% since the beginning of the year, but at $33.89 per share, it is still trading 10.2% below its 52-week high of $37.76 from October 2025. Investors who bought $1,000 worth of Applied Digital’s shares 5 years ago would now be looking at an investment worth $664,593.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
