Applied Digital stock closed trading Wednesday nearly 9% higher, outpacing the S&P 500 index, which gained 0.5% for the session. The surge followed the announcement of a joint venture with Soluna Holdings to build a data center in Texas, supported by a new buy recommendation from Roth/MKM.
Before the market opened, Soluna Holdings disclosed that it and Applied Digital have agreed to form an unnamed joint-venture company. The entity plans to construct a 50-megawatt, next-generation data center near Soluna’s Dorothy 3 development site in Texas. The facility will be powered in part by a nearby wind farm.
Under the proposed terms, Applied Digital is expected to hold a 51% stake in the joint venture, with Soluna Holdings owning the remaining interest. Soluna will contribute the required land and power-related project assets, while Applied Digital will provide the capital. The agreement is subject to several conditions and approvals, including a tax abatement from the county where the project will be located. The companies expect to complete the agreement by the end of this year.
The data center already has a prospective tenant. Soluna Holdings stated that ChronoScale Holdings, an accelerated compute platform majority-owned by Applied Digital, has signed a non-binding letter of intent to lease the facility.
Separately, Bryan Baratian of Roth/MKM reinstated coverage of Applied Digital with a buy rating. He set a price target of $35 per share, which represents a 67% premium to the stock’s latest closing price. The analyst’s note added to the bullish sentiment surrounding the equity on Wednesday.
Applied Digital continues to distinguish itself from other former or current crypto businesses expanding into the AI data center sector. Earlier this month, the company announced it reached ready-for-service status at a facility in North Dakota. This milestone adds to the momentum in its AI infrastructure business.