Applied Digital Stock Jumps 7% After Top Executives Buy Shares Near 52-Week Low Following AI Sell-Off

NEW YORK — Shares of Applied Digital rose more than 7% on Monday after regulatory filings showed that two of the data center developer's most senior executives bought shares last week, when the stock fell to a 52-week low.

Applied Digital shares were up $1.35, or 7.48%, at $19.40 in morning trading on the Nasdaq, with nearly 8 million shares changing hands. The company has a market value of about $5.9 billion.

The stock had dropped 11.5% on Friday to close at $18.05, after hitting a 52-week low of $17.65 during the session.

Insider buying

Securities and Exchange Commission filings disclosed that two of Applied Digital's top executives made substantial open-market purchases of company stock on Oct. 16, according to Investing.com.

Insider purchases are often viewed by investors as a sign of confidence, particularly when made after a steep decline.

Rough week for AI infrastructure

Applied Digital shares lost about 22% last week amid a broad sell-off in companies that build and finance data centers for artificial intelligence. Investors have grown concerned about heavy borrowing in the sector and higher interest rates, which raise financing costs.

The stock was also pressured by Rothschild & Co Redburn's initiation of coverage with a Neutral rating and a $22 price target, which flagged concerns about elevated valuations across the AI infrastructure space.

Applied Digital carries about $6.4 billion in debt, and coverage has highlighted concerns about leverage and potential dilution.

The stock is highly volatile, with a beta of about 6, meaning it tends to move far more sharply than the overall market.

Strong growth

Despite the sell-off, the Dallas-based company has reported rapid revenue growth. Earlier this month, it posted fiscal first-quarter revenue of $341.9 million, far above analysts' expectations of about $125 million, as recently completed AI data center capacity came online.

Analysts remain largely positive, with an average price target well above the current share price. Morgan Stanley recently raised its target to $41 from $37.50 while keeping an Equal-Weight rating.

Down sharply from highs

Applied Digital shares remain far below their 52-week high of about $50.73 and are down about 50% from a year earlier.

Investors will watch whether the rebound in AI infrastructure stocks continues, as well as Applied Digital's progress on new data center projects and financing.