Why Did Applied Digital Stock Skyrocket 34.5% This Week?

Group 1 - Shares of Applied Digital (NASDAQ: APLD) increased by 34.5% this week, driven by a broader market rise with the S&P 500 and Nasdaq-100 up 1.6% and 1.9% respectively [1] - The surge in Applied Digital's shares followed a significant $17.4 billion deal between Microsoft and AI cloud provider Nebius for AI infrastructure over the next five years, indicating strong demand for data centers [2] - Nebius CEO Arkady Volozh anticipates more similar deals in the future, which will further accelerate the growth of their AI cloud business beyond 2026 [2] Group 2 - The AI data center market presents substantial opportunities, but companies like Applied Digital face significant risks, including high levels of debt and the potential need to borrow more at high interest rates or dilute existing shareholders [4] - There is a concern that demand for AI data centers may eventually cool, leaving companies like Applied Digital vulnerable [5] - Despite the positive news surrounding the Microsoft-Nebius deal, analysts suggest caution regarding investments in Applied Digital due to the associated risks [6][5]