Nvidia cutting stake isn't a sign to sell Applied Digital stock: here's why

Applied Digital (NASDAQ: APLD) saw its momentum hit a speed bump on Wednesday as shares tanked nearly 10% following a 13F filing that revealed Nvidia has sold its entire “stake” in the AI infrastructure firm.

Nvidia originally entered APLD in September 2024, participating in a $160 million funding round at just $3.24 per share.

Since then, the Dallas-headquartered firm has been nothing short of a market darling.

Heading into Feb. 18, Applied Digital stock was up nearly 25% year-to-date, extending a whopping 237% rally in 2025.

Should you follow Nvidia and sell Applied Digital stock?

On the surface, Nvidia’s exit feels like a vote of no confidence, but for seasoned investors, context should take precedence.

APLD stock was trading at about $33 before today’s decline, suggesting NVDA’s move isn’t about a change in fundamentals. It’s simply a titan taking its chips off the table.

Having seen its investment grow “ten-fold” in less than 18 months, Nvidia’s decision to reallocate capital – moving into undervalued names like Intel and Nokia – is routine portfolio rebalancing.

Crucially, the “Nvidia halo” served its purpose: it validated Applied Digital Corp’s transition from a crypto-hosting firm to a premier AI infrastructure powerhouse.

And it’s not like NVDA is cutting ties entirely. It remains a critical partner on the operational side, as APLD’s data centers are specifically designed to house massive H100 and Blackwell clusters.

In short, the departure from the cap table doesn’t equate to a departure from the ecosystem; it’s merely the natural evolution of a strategic investment reaching its maturity.

What makes APLD shares worth owning in 2026?

Applied Digital remains attractive as a long-term holding also because of its massive “$16 billion” contracted revenue backlog that spans the next 15 years.

This isn’t speculative growth; it’s locked-in demand from investment-grade tenants.

APLD recently celebrated a milestone at its Polaris Forge 1 campus, delivering the first “100 MW” building on time and on budget to CoreWeave – an $11 billion deal in itself.

Additionally, it has secured a $5 billion lease agreement for Polaris Forge 2 with a US hyperscaler.

Long-term investors are recommended to stick with Applied Digital shares also because its latest reported quarter – despite the ongoing capital-intensive phase of construction – saw revenue more than triple year-on-year to $127 million.

With $1.9 billion in cash and a strategic pivot to liquid-cooled “AI Superfactories”, Applied Digital is no longer a “crypto play” – it’s the literal landlord of the artificial intelligence revolution.

Applied Digital’s broader uptrend remains intact

Despite Nvidia’s departure, Northland Capital analysts remain bullish as ever on APLD shares.

On Wednesday, the investment firm reiterated its “outperform” rating on the AI infrastructure firm, citing 4.3 GW of capacity in active development, with total planned capacity exceeding 9 GW.

Moreover, Vanguard’s and Situational Awareness LP’s recent investments suggest Applied Digital continues to attract smart money.

Note that bears failed to drive APLD price below its 100-day moving average (MA) on Feb. 18, which reinforces that the Nvidia-driven sell-off will likely prove temporary only.