Shares of Applied Digital jumped 4.4% to $20.19 on October 21 after two catalysts landed before the opening bell: a joint venture with Soluna Holdings to build a wind-powered AI data center in Texas, and a freshly reinstated Buy rating from Roth/MKM with a $35 price target — implying roughly 81% upside from the prior close.

  • A Wind Farm Next Door Cuts the Biggest Cost in AI Infrastructure. The two companies signed a definitive agreement to develop a 50 MW data center near Silverton, Texas, powered by renewable energy from the Briscoe Wind Farm.

Soluna contributes land and project assets; Applied Digital provides the capital

and will hold a controlling 51% stake. Energy is the single largest recurring expense for any data center. Locking in wind power adjacent to the facility could meaningfully lower operating costs — a real edge in a market where power access, not chip supply, is the binding constraint.

  • The Tenant Is Already in the Family — and That Cuts Both Ways. A tenant is already being lined up: ChronoScale Holdings, a publicly traded company majority-owned by Applied Digital, has signed a non-binding letter of intent to lease the facility.

Applied Digital owns approximately 97% of ChronoScale's outstanding shares. That means the parent is essentially leasing to itself. It fast-tracks occupancy risk off the table but raises related-party transaction questions. The letter of intent is also explicitly non-binding, and the final lease still has to be negotiated.

  • A Nice Deal, but Small Relative to the Company's Appetite. Applied Digital reported $611.3M in revenue for fiscal year 2026, up 167.5% year-over-year.

Capital expenditures reached $2.9 billion, while free cash flow was negative $2.8 billion. A single 50 MW site is modest compared to the 600+ MW of capacity the company says it expects to bring online in the next 12 months. The deal signals strategic intent around renewable-powered AI sites but won't materially alter near-term financials by itself. Closing is targeted by year-end, pending a local tax abatement in Briscoe County.

  • Wall Street Sees a Disconnect Between Price and Progress. Roth/MKM's $35 target reflects roughly 81% upside, arguing that the current valuation offers lopsided upside supported by secured equipment and a repeatable data center design.

Revenue has grown 218% over the trailing twelve months, though the stock carries a beta of 6.0 — meaning its price swings far more violently than the broader market. At $20, shares sit 60% below the 52-week high of $50.73. Financial strength and profitability scores remain very weak at 2/10 and 1/10 respectively, highlighting ongoing challenges with debt and losses. The stock is cheap — if execution follows.