Applied Digital plans 50 MW Texas AI site

Applied Digital has agreed to jointly develop a 50 MW critical IT data center for artificial intelligence and high-performance computing in Briscoe County, Texas. The facility, referred to as Project Dorothy 3, is planned at a site next to the 150 MW Briscoe Wind Farm near Silverton. The development focuses on creating new AI-focused infrastructure capacity rather than expanding an existing data center footprint.

The project is structured as a jointly owned venture between Applied Digital and Soluna Holdings. It represents a significant move to add power-backed AI data center capacity in a region that already hosts substantial wind generation assets.

Under the definitive agreement, a project company will be formed to own and develop the Project Dorothy 3 facility. Applied Digital is expected to provide the capital needed for development and, once the transaction closes, will hold a 51% controlling stake in the project entity. Soluna will contribute a portion of its Dorothy 3 site, including land and power-related assets, and will retain a 49% stake.

The arrangement pairs a capital provider and builder-operator with a holder of land and interconnection rights. Applied Digital’s majority position is tied to its funding obligation, while Soluna monetizes existing power-related assets by integrating them into the new data center project.

The planned facility will be located alongside the 150 MW Briscoe Wind Farm in Briscoe County. The project is expected to draw power from both the Briscoe Wind Farm and the local electrical grid. This combination is intended to support the 50 MW of planned critical IT capacity for AI and high-performance computing workloads.

By situating the data center adjacent to an existing wind asset, the project seeks to align large-scale compute infrastructure with established renewable generation and available interconnection. The physical proximity to the wind farm is a central feature of the site configuration at Dorothy 3.

ChronoScale Holdings, an accelerated compute platform for AI workloads and majority-owned by Applied Digital, has signed a non-binding letter of intent to lease the facility once it is built. The prospective arrangement is structured as a triple-net lease at the planned site. However, the letter of intent does not obligate ChronoScale to occupy the facility and remains subject to definitive documentation.

The current agreements set out a development framework rather than a completed project. The joint venture closing is targeted for the end of the calendar year and remains contingent on several conditions, including final tax abatement approval from Briscoe County, internal approvals, and definitive lease and power supply agreements. Even if closing occurs, construction and full build-out of the 50 MW capacity will still need to be executed.

Applied Digital’s shares advanced following the announcement of the Project Dorothy 3 joint venture and related developments. One trading session saw the stock gain 8.5%. The move reflected investor attention on the company’s expansion into a new AI and HPC-focused site backed by power assets.

Roth/MKM reinstated coverage of Applied Digital with a Buy rating and a $35 price target. The analyst highlighted execution certainty supported by secured equipment and a scalable AI factory design, rising lease economics for new capacity, and power-backed growth in favored data center markets as key drivers behind the positive view on the stock.