Axe Compute Soars on $260M Nvidia Deal. Is It Too Late to Buy AGPU Stock?

Axe Compute (AGPU) stock more than doubled on April 22 after the company announced a massive $260 million enterprise infrastructure deal involving 2,304 Nvidia (NVDA) B300 chips. 

This landmark contract — the largest in AGPU’s history — drove its relative strength index (14-day) into the mid-80s, signaling the stock may be due for a pullback in the near term. 

At its intraday peak, Axe Compute shares were seen trading at more than 7x their price last month. 

Does the Nvidia Deal Warrant Buying Axe Compute Stock?

The Nvidia deal brings much-needed validation to Axe Compute, which is why investors were sent into a frenzy on Wednesday morning. 

By securing thousands of Nvidia’s most sophisticated Blackwell GPUs, the Nasdaq-listed firm has positioned itself as a serious contender in the high-stakes artificial intelligence (AI) infrastructure race. 

The contract, structured as a three-year, take-or-pay agreement, offers a predictable recurring revenue stream, which has historically been a weak spot for Axe Compute. 

All in all, for the company that’s generated just $130,000 in revenue in the trailing 12 months, the NVDA deal represents a monumental leap in scale. 

This signals that enterprise clients are increasingly turning to smaller, more agile providers to bypass hyperscaler supply constraints.  

The Many Risks of Buying AGPU Shares Today

Despite the euphoria, Axe Compute remains a high-risk play, given its penny stock status that makes it vulnerable to extreme volatility and potential pump-and-dump behavior. 

At a price-to-sales (P/S) ratio of more than 200x, AGPU shares are egregiously overvalued given the company’s alarming GAAP loss of $13.37 per share in its latest fiscal year. 

Plus, the $260 million deal doesn’t begin deployment until Q3, which means Axe Compute must survive another quarter or two of high burn before cash flow so much as begins to improve. 

Meanwhile, execution and dilution risks remain a dark cloud over AGPU’s current rally as well. 

Axe Compute Doesn’t Receive Coverage From Wall Street

Another major red flag on Axe Compute is the absence of Wall Street coverage. 

This means investors have absolutely no professional guidance on valuation and prospects, which often helps a great deal in navigating global financial markets.