Sometimes I actually know what I’m talking about!!
At the end of July, I went to New York for an interview with the NYSE.
One of their questions to me was, “What is your undiscovered, low-priced AI play?”
My pick for them was Applied Digital Corporation (NASDAQ: APLD).
The reason I picked this company is because of my overarching thesis on the future of AI and what kind of demand it’s going to produce.
I truly believe the successful plays in the AI industry are going to be those companies that are in the data center cooling business, which is exactly what APLD does.
APLD designs, develops and operates digital infrastructure solutions through three segments: Data Center Hosting; Cloud Services; and High-Performance Computing (HPC) Hosting. It provides innovative cooling solutions through its Data Center Hosting business.
Why is data center cooling so important?
We all know the AI industry is booming, but most people don’t realize just how power-hungry and heat-producing these systems are.
The amount of data AI processes is immense, and with that data comes the need for serious computing power. And when you’ve got machines running complex algorithms around the clock, the heat they generate isn’t just a side effect—it’s a real problem.
Without proper cooling, AI hardware can overheat, slow down, or, in the worst-case scenario, fail completely.
So now that we’ve established exactly why I chose a stock in the data center cooling industry, why am I patting myself on the back for choosing APLD as my top pick?
Take a look at the chart from around the time of my interview through yesterday…
APLD 1-Month; 1-Hour Candles Chart; SteadyTrade
In my August newsletter to my StockstoTrade Advisory subscribers I included it in my monthly stock picks. Here were my exact words:
“I like APLD at an entry price of $5.00 per share with a stop-loss level of $4.50. And if my thesis on data center cooling is right, I think this could go to $8+, which it did in the spring.”
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We definitely hit the $5 entry on Monday morning…
It didn’t reach $8 that day, but it did reach $6.60, which is a gain of 32% in six hours.
And I see APLD as a multi-day runner. It’s not out of juice just yet…
Like I said earlier, data center cooling is a hot (pardon, the pun) sector right now due to AI’s unending appetite for data processing power.
Here’s some more background on AI and AI cooling:
When you’ve got machines running complex algorithms around the clock, the heat they generate isn’t just a side effect—it’s a real problem.
Without proper cooling, AI hardware can overheat, slow down, or fail completely. That’s why cooling is central to keeping the AI industry alive and running at peak performance.
When a machine overheats, it slows down, and when your AI systems are running slower, your efficiency drops, your costs go up, and you’re no longer competitive.
In extreme cases, overheating can lead to hardware damage, costing millions in repairs and replacements—not to mention the downtime.
Imagine a self-driving car’s AI system overheating mid-operation or a healthcare AI crashing while processing critical patient data. The consequences are far too dangerous to ignore.
What’s Being Done?
The good news is that the AI industry is aware of this problem, and some cutting-edge cooling solutions are already in place.
Data centers are moving away from traditional air-cooling methods, where fans blow air over hot components, to more advanced liquid-cooling systems —which is exactly what Applied Digital produces.
Liquid cooling is exactly what it sounds like—liquid is circulated through pipes to absorb heat from the processors and other components. This method is far more efficient than air cooling because water can absorb heat much faster than air.
Other Stocks Involved with AI Cooling
NVIDIA Corporation (NASDAQ: NVDA)
Did you actually think NVDA wouldn’t end up on this list? There’s a reason it’s the world leader in the AI space. Besides its GPUs, it develops cooling solutions.
With GPUs running hotter due to increased workloads, NVIDIA has been pushing innovations in liquid cooling for its hardware.
Here’s a one-month chart for NVDA:
NVDA One-Month, One-Hour Candles Chart; SteadyTrade
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Vertiv Holdings Co. (NYSE: VRT)
Vertiv is one of the leading providers of cooling systems specifically designed for data centers. They offer a range of solutions including liquid cooling, air-cooled systems, and immersion cooling technology.
VRT One-Month, One-Hour Candles Chart; SteadyTrade
Advanced Micro Devices (NASDAQ: AMD)
Similar to NVIDIA, AMD is another major player in the AI hardware space, particularly with their high-performance GPUs and CPUs.
AMD has been working on innovative cooling systems to support its hardware, especially liquid cooling technologies.
AMD One-Month, One-Hour Candles Chart; SteadyTrade
Applied Optoelectronics Inc. (NASDAQ: AAOI)
Applied Optoelectronics provides fiber-optic networking products used in data centers, which are key to supporting AI workloads.
While not solely a cooling company, they are part of the broader infrastructure supporting AI growth, and their products help data centers manage power and cooling more efficiently.
AAOI One-Month, One-Hour Candles Chart; SteadyTrade
CleanSpark, Inc. (NASDAQ: CLSK)
CleanSpark offers energy solutions for data centers, including microgrid energy management and energy-efficient systems that help reduce the power consumption of cooling AI workloads.
They aim to help data centers operate more sustainably, which includes managing the massive cooling needs of AI systems.
CLSK One-Month, One-Hour Candles Chart; SteadyTrade
The Future of AI Cooling: An Ongoing Challenge
There’s no doubt that AI is here to stay, and as it evolves, so too will the need for smarter, more efficient cooling systems. I think the sky’s the limit for cooling demand at this point in time.
So hopefully now you can understand the method to my data center cooling madness. I think there’s a lot of room for these stocks to run and I’m absolutely here for it!
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
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