Nvidia Exits Applied Digital Stake, Sparking Market Reaction

Shares of data center infrastructure firm Applied Digital faced significant selling pressure in extended trading yesterday. The decline was triggered by a regulatory disclosure showing that semiconductor leader Nvidia has completely divested its stake in the company. Investor sentiment turned nervous following the exit of this high-profile backer, pushing the stock down by approximately eight percent at one point.

• Full Divestment: Nvidia sold all 7.72 million shares it held during the fourth quarter of 2025.
• Stake Value: The position was worth an estimated $177 million as of the end of December.
• Portfolio Shift: Concurrently, Nvidia established new investments in firms including Intel, Nokia, and Synopsys.
• Recent Performance: Applied Digital's latest quarterly revenue was reported at $126.6 million.

The divestment came to light through a mandatory 13F filing with regulators. Market observers find Nvidia's decision to liquidate its entire position notable given the recent history between the companies. As recently as September 2024, Nvidia participated in a $160 million funding round for Applied Digital.

The timing of the AI chipmaker's exit from its partner raises questions. While Nvidia maintains investments in other partners like CoreWeave, the recent filing also revealed the sale of stakes in Arm Holdings and Recursion Pharmaceuticals. This pattern suggests a broader strategic rebalancing of Nvidia's investment portfolio rather than a signal of specific fundamental issues at Applied Digital.

Analyst Outlook Amid Sector Challenges

Despite the loss of a marquee investor, some analysts maintain a constructive view. Northland Capital's Mike Grondahl reaffirmed his "Outperform" rating on the shares following the news, citing the company's robust project pipeline. Currently, 4.3 gigawatts (GW) of capacity are in active development, with total planned capacity exceeding 9 GW.

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The company, however, is navigating industry-wide headwinds. CEO Wes Cummins recently highlighted significant supply chain constraints. A critical bottleneck involves the procurement of gas turbines, which are essential for powering data centers, with lead times now extending into 2031 and 2032.

Funding for Applied Digital's large-scale infrastructure projects appears secured for now, supported in part by a credit facility from Macquarie. The next potential catalyst for the stock will likely be the upcoming quarterly results, expected around May 8, 2026. In the interim, market focus will center on the company's ability to execute its development timeline amid persistent hardware procurement challenges.

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