Applied Digital Spins Off Cloud Business to ChronoScale, Keeps $16 Billion in AI Leases

NEW YORK, April 9 —

Applied Digital Corporation (APLD) reported Q3 revenue of $126.6mn, up 139% YoY, while advancing a spin-off that will split the company in two.

What Actually Happened

Applied Digital is carving out its GPU cloud business and merging it with EKSO Bionics Holdings to create ChronoScale Corporation. The new entity will handle accelerated compute workloads, the volatile, capital-hungry side of AI infrastructure. What stays behind at APLD: the data center campuses and roughly $16bn in contracted lease payments over 15 years, mostly from CoreWeave.

This is a deliberate pivot from "we do everything AI" to "we are your AI landlord." The company also restructured its CoreWeave leases through a special-purpose vehicle carrying an investment-grade A3 rating, which is the real financial engineering here. That credit upgrade backstops a $2.15bn senior secured note offering at 6.750% due 2031, funding the 200 MW Polaris Forge 2 campus in North Dakota. In plain terms: APLD is borrowing at rates its own balance sheet probably couldn't support alone, by wrapping its biggest tenant's creditworthiness around the debt.

The Catch

The revenue beat looks huge, but look closer. GAAP net loss was $100.9mn, or negative $0.36 per share, missing estimates by more than double. Of that $71mn HPC segment, $18.9mn came from tenant fit-out services and $8.1mn from power pass-through. Strip those out and the recurring base rent was $44.1mn. That's a meaningful distinction when you're valuing this as a data center REIT.

The bigger risk: concentration. The $16bn lease book depends heavily on CoreWeave. If CoreWeave hits turbulence, APLD's entire thesis as a safe infrastructure landlord unravels. Debt-to-equity sits at roughly 1.7x with $2.7bn in debt against $1.58bn equity. That ratio works if leases hold. It doesn't if they don't.

Bottom Line

Post spin-off, APLD becomes a simpler story: long-duration AI data center leases, investment-grade tenant credit backing, and a construction pipeline that should push capacity well past 400 MW by 2027. The stock is up about 25% since the ChronoScale announcement, which prices in some of this clarity. The question now is whether the market values APLD like a growth tech stock or a leveraged infrastructure play. Those are very different multiples.

Watch the debt-to-equity ratio after ChronoScale closes and whether base rent (not total HPC revenue) keeps scaling with new megawatts coming online.

For a full breakdown of Applied Digital's financials and valuation, generate a free Basis Report on APLD.

Basis Report does not hold positions in securities discussed. This is not investment advice.