The path of least resistance in the market seems to be up this week. The Nasdaq rose nearly 2% in trading Thursday while the S&P 500 gained just under 1% on the day. Hopes that a debt ceiling agreement could be reached by the weekend helped fuel the surge in equities. I personally believe this is likely to be a "buy the rumor, sell the news" type event when it occurs, but it was enough to continue to boost stocks for the day.
As I promised in my Wednesday column, I will put on the optimist's hat for today and will highlight two high beta small-caps that delivered some good news for their shareholders this week. I own a small piece in each, and still consider both very speculative at this point.
We will start with Applied Digital Corp. (APLD) . The stock has been one of the best performers in the market so far this week. The Dallas-based company operates 'next generation' data centers. The company designs and constructs these centers to provide substantial high-performance computing power to customers - such as cryptocurrency miners.
Customers place their hardware within these energized centers. The facilities required massive amounts of energy to keep the servers powered and cool. Thus, these centers are most effectively placed in remote geographies with low power costs, such as North Dakota and Texas. The company has a couple of centers up and running. Current plans are for three facilities with nearly 500MW of operating capacity which management projects will bring in $100 million in annual EBITDA.
Applied Digital took a huge step towards fulfilling that promise Tuesday, when it signed an AI Cloud Service to a two-year contract worth up to $180 million. The agreement will also include a significant upfront payment. This will boost revenues significantly in the quarters ahead, moves the company into a fast-growing niche, helps validate its approach and provides a much-needed boost to its cash balances.
Next up is Immutep Ltd. (IMMP) , one most high beta, high potential reward stocks in my portfolio. On Wednesday, the oncology focused developmental concern announced new trial results that triggered a sharp rally in the shares. Immutep's lead candidate 'Eftilagimod Alpha' combined with the blockbuster Keytruda from Merck (MRK) demonstrated impressive results as a combination therapy in a mid-stage study.
Targeting non-small cell lung cancer, the combo therapy produced a median overall survival rate of 25 months. This was significantly better than other current treatments on the market. Additional data from this trial will be presented at a medical conference in the second half of this year. Eftilagimod Alpha is also being studied to treat head and neck squamous cell carcinoma and metastatic breast cancer. Immutep still has a way to go to potential commercialization, but the trial news was an important milestone in that journey.
