Applied Digital Corp (APLD) experienced a sharp decline in pre-market trading on Friday, with its stock plummeting 8.22%. This significant drop comes just a day after the company's shares soared 31% in the previous session, suggesting a potential market correction.

The previous day's rally was driven by news that CoreWeave, a key client, had significantly expanded its computing lease with Applied Digital. This expansion was reportedly due to booming demand from AI giants, which had initially propelled investor enthusiasm. However, the sudden reversal in stock price indicates that the market may be reassessing the sustainability of such rapid gains.

It's worth noting that the options market on Thursday showed high activity for APLD, with a total of 427,860 options traded. Interestingly, 77% of these were call options, reflecting bullish sentiment at the time. The $14 strike call option expiring on August 1 saw particularly high volume with 28,035 contracts. This options activity, coupled with the stock's volatility, suggests that traders are closely watching APLD's movements in the fast-paced AI and computing sector.