First Pacific Advisors Trims InterDigital Position Amid Q2 2025 Investor Letter

First Pacific Advisors' FPA Queens Road Small Cap Value Fund has started to trim its position in InterDigital (IDCC), a research and development company specializing in wireless, visual, and AI technologies. The fund highlighted IDCC's strong financial performance, successful licensing agreements, and growing recurring licensing revenues. IDCC's stock price has increased over the past year due to growing revenue, profitability, and buybacks.

First Pacific Advisors' FPA Queens Road Small Cap Value Fund has recently begun to trim its position in InterDigital Inc. (IDCC), a global research and development company specializing in wireless, visual, and artificial intelligence (AI) technologies. The fund's decision comes despite IDCC's strong financial performance and successful licensing agreements. In the second quarter of 2025, IDCC reported revenue of $300 million, which exceeded the top end of guidance driven by the Samsung arbitration award and HP license agreement [1].

IDCC's stock price has significantly increased over the past year, with a one-month return of 18.67% and a 99.02% gain in the last 52 weeks. The stock closed at $268.74 per share on August 15, 2025, with a market capitalization of $6.934 billion. However, FPA Queens Road Small Cap Value Fund believes that certain AI stocks offer greater upside potential and carry less downside risk [1].

In its second-quarter 2025 investor letter, the fund highlighted IDCC's strong financial performance and successful licensing agreements. However, it also noted that the company's AI stocks offer greater upside potential and carry less downside risk. The fund's trimming of its position in IDCC reflects its view that other AI stocks may provide better investment opportunities.

Meanwhile, Applied Digital Corporation (NASDAQ:APLD) has announced plans to build a $3 billion AI data center in North Dakota. The facility, named Polaris Forge 2, will have an initial capacity of 280 megawatts and is expected to reach full capacity in early 2027. The company has secured power through Cass County Electric Cooperative and has contracted more than 900 acres for the campus [2].

The new project builds on Applied Digital's existing Polaris Forge 1 campus in Ellendale, North Dakota. The company cited the state's abundant energy, available land, and pro-business climate as factors in its expansion decision. North Dakota Governor Kelly Armstrong expressed enthusiasm for the company's expansion to Harwood, noting that Applied Digital has invested in workforce housing and created local partnerships in Ellendale.

Applied Digital Corp. reported its financial results for the fourth quarter of 2025, surpassing earnings per share (EPS) expectations with a reported EPS of -$0.03 against the anticipated -$0.14. However, the company's revenue for the quarter fell short, reaching $38 million compared to the forecasted $42.07 million. Additionally, Applied Digital has doubled its Series G preferred stock offering to $300 million, amending its preferred equity purchase agreement to provide further capital for the development of its Polaris Forge I data center in Ellendale, North Dakota [2].

References:
[1] https://finance.yahoo.com/news/fpa-queens-road-small-cap-142131364.html
[2] https://www.investing.com/news/company-news/applied-digital-to-break-ground-on-3-billion-ai-data-center-in-north-dakota-93CH-4197615