Generative AI training infrastructure remains white hot as an investment. Numerous start-ups have appeared to address the need. Given the end-to-end solution Nvidia created that spans chip design, algorithms, and software, this AI infrastructure consisting of data centers filled with accelerated computing systems (primary using Nvidia technology) is arguably easier to build than "traditional" cloud computing infrastructure. That has been rocket fuel for these specialized data center builder-operators in the last year.

One of those specialists is Applied Digital (NASDAQ: APLD), formerly Applied Blockchain. Applied Digital raced higher in 2023, fell hard, then started to rally again at the end of the year. But to kick off 2024, shares are falling again as the market comes to terms with the cadence of future profitability for the business. Here's why most individual investors should steer clear.

We're a long way from the "chip shortage" of 2021 when pandemic-disrupted supply chains paired with skyrocketing consumer demand for all things electronic wreaked havoc on the semiconductor industry. But new supply shortages struck last year, affecting the electrical components used to network GPUs (graphics processing units, chip systems used to accelerate computing work) and turn data centers into massive computing units that can train AI algorithms.

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Source Fool.com