Why Applied Digital Stock Plummeted This Week

Applied Digital (NASDAQ: APLD) stock got crushed in this week's trading. The company's share price fell 24.3% from its level at the previous week's market close, according to data from S&P Global Market Intelligence.

Applied Digital saw a big valuation pullback during a week of trading that saw large bearish moves for most artificial intelligence (AI) stocks. In addition to rising macroeconomic concerns, investors sold out of AI stocks following Nvidia's earnings report on Wednesday.

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Applied Digital stock stumbled as investors weighed macroeconomic risks

Some indicators for inflation and other facets of macroeconomic health have been coming in worse than anticipated lately. Investors bristled at another set of macro risk factors this week.

The Trump administration confirmed plans to introduce new tariffs on Canada and Mexico. The president's team is also said to be looking at new export restrictions that would prevent the sale of AI chips and semiconductor manufacturing equipment to China. With Applied Digital's data centers relying on semiconductors manufactured in Taiwan and other countries, investors are worried the company could soon see higher hardware costs.

Applied Digital stocks following Nvidia's big Q4 report

Applied Digital is one of just a handful of companies Nvidia is directly invested in. As a result, the data-center specialist's stock often sees big moves in conjunction with Nvidia-related news -- and it was a big week for the AI leader.

Nvidia published its fourth-quarter results after the market closed on Wednesday -- posting sales, earnings, and forward guidance that beat Wall Street's expectations. Despite the better-than-expected Q4 print and near-term guidance, Nvidia cautioned about uncertainty surrounding the impact of new chip export restrictions. As a result, Nvidia, Applied Digital, and other AI stocks saw big sell-offs in the day of trading following the big earnings release.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.