What Happened?

Shares of digital infrastructure provider Applied Digital (NASDAQ: APLD) fell 6.1% in the afternoon session after a broader sell-off in the artificial intelligence (AI) infrastructure sector amid concerns over high valuations and potential share dilution. The stock's drop was part of a wider market pessimism for AI-related companies, as investors grew worried about heavy spending in the sector and how quickly those investments might be recouped.

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What Is The Market Telling Us

Applied Digital’s shares are extremely volatile and have had 92 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 5 days ago when the stock dropped 4.9% on the news that investors rotated out of AI-linked high-flyers following underwhelming earnings updates from Oracle and Broadcom as the core thesis shifted from "growth at any cost" to "prove the returns."

Oracle triggered the alarm by missing revenue estimates while simultaneously hiking capital expenditures by $15 billion. This reignited fears that AI infrastructure spending is outpacing actual monetization. Broadcom compounded the anxiety; despite beating earnings, its stock fell as CFO Kirsten Spears cautioned that gross margins may come under pressure as product mix shifts further toward system-level AI sales. This sparked a macro rotation away from AI infrastructure and power plays.

Applied Digital is up 196% since the beginning of the year, but at $23.11 per share, it is still trading 38.8% 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 $114,976.

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