Is Applied Digital (APLD) the Best AI Stock to Buy Under $10?
We recently published a list of . In this article, we are going to take a look at where Applied Digital Corporation (NASDAQ:APLD) stands against other best AI stocks to buy under $10.
Fears of an artificial intelligence bubble bursting appear overblown. That's the sentiment echoed on Wall Street in the aftermath of tech giants delivering better-than-expected quarterly results and reiterating investments in AI infrastructure. Increased investments in AI Infrastructure and other solutions have once again affirmed sentiments in the burgeoning segment that was the catalyst behind US markets powering to record levels last year.
At the beginning of the year, investors became worried that the AI surge might collapse in the aftermath of the Chinese company DeepSeek creating a sophisticated large language model that needed less energy and funding. The news from DeepSeek caused a significant change in market sentiment and led to a decline in AI stocks that had experienced substantial increases for most of the year.
Fast forward, tech giants signaling they will continue to invest in AI and cloud infrastructure is a tailwind that continues to reiterate sentiments around AI stocks. Companies ramping up investments to address capacity constraints in their cloud unit, as others ramp investments in AI-powered servers and data center assets, are a positive for the overall sector.
According to AMD CEO Lisa Su, ordering patterns around everything AI remains strong, signaling people and companies are not making short-term decisions. Initially, there were concerns that companies pursuing opportunities around AI had spent far too much and too quickly to build out infrastructure and would need to go slow. Consequently, tech giants whose valuations had skyrocketed to record highs pulled back significantly as investors remained wary of their long-term outlook amid an uncertain macroeconomic environment that is crumbling amid a ferocious trade war and export controls.
Continued investments in AI should be expected as companies look to strengthen their product and services portfolio while also strengthening their competitive edge. There have been concerns that heightened regulations and authorities placing guardrails could derail innovations around artificial intelligence. However, that appears not to be the case.
According to Wedbush Securities global head of technology research Dan Ives, 'Innovations around AI are growing at 100 miles per hour while regulatory pressure is only growing at 35 miles an hour'.
According to Ives no amount of regulation is going to change the heightened amount of spending around AI. 'The use cases are exploding and no amount of regulation is going to change it' said Ives in an interview with CNBC. Ives added:
'In terms of use cases, US commercial businesses are exploding. Right now we have 85 use cases, a year ago we had 10. I think what we are starting to see is more and more that it is across verticals healthcare financials government and retail among others.'
The fact that executives from some of the biggest tech giants have denied they are cutting back spending on servers and data makes the case for why investors should pay attention to some of the AI stocks trading at highly discounted valuations.
We sifted through Finviz and financial media reports to compile a list of top AI stocks trading below $10. We then selected the 13 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order based on the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey's database, which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points ().
An overhead view of a large-scale data center with rows of servers and blinking lights.
Stock Price as of May 12: $5.39
Number of Hedge Fund Holders: 41
Applied Digital Corporation (NASDAQ:APLD) is an information technology services company that designs, develops, and operates digital infrastructure solutions and cloud services for high-performance computing (HPC) and artificial intelligence industries. It offers infrastructure services to crypto mining customers and GPU computing solutions for critical workloads related to AI, machine learning, and other HPC tasks. On April 23, Needham reiterated a Buy rating on the stock with a $10 price target buoyed by the company's prospects in the burgeoning cloud computing industry.
Applied Digital Corporation's (NASDAQ:APLD) long-term prospects hinge on increased spending in AI Hardware and other processing capabilities. Consequently, the stocks sentiments have received a significant boost on confirmation that tech giants led by Microsoft and Meta plan to continue spending on AI hardware and processing capabilities.
Applied Digital Corporation's (NASDAQ:APLD) delivered impressive third-quarter fiscal 2025 results, characterized by a 22% year-over-year revenue increase. The company's cloud service business posted a 220% revenue increase to $17.8 million. The robust revenue growth affirms that positioning in high-performance computing infrastructure will surely generate long-term value. The company is already working on the Ellendale campus in addition to a 100MW HPC facility expected to strengthen its competitive edge in the hyperscaler market.
Overall, APLD ranks 3rd on our list of best AI stocks to buy under $10. While we acknowledge the potential of APLD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than APLDbut that trades at less than 5 times its earnings check out our report about this .
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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