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. At the same time, the company is preparing a spin-off that will split it in two.
- Q3 FY2026 revenue hit $126.6mn vs. $76.56mn estimate, driven by $71mn in HPC hosting
- Total debt reached $2.7bn against $1.58bn in equity, with $2.1bn cash on hand
- ChronoScale spin-off expected to close H1 2026. APLD will own roughly 97% of the new entity
What Actually Happened
Applied Digital is carving out its GPU cloud business and merging it with EKSO Bionics Holdings to create ChronoScale Corporation. ChronoScale 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.
The message to investors is blunt: APLD no longer wants to be "the everything AI company." It wants to be an AI landlord. The company also restructured its CoreWeave leases through a special-purpose vehicle carrying an investment-grade A3 rating. That credit upgrade is the real financial engineering here. It backstops a $2.15bn senior secured note offering at 6.750% due 2031, funding the 200 MW Polaris Forge 2 campus in North Dakota. Translation: 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. 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 distinction matters 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 falls apart. 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 past 400 MW by 2027. The stock is up about 25% since the ChronoScale announcement. Some of that clarity is already priced in. The question now: does the market value APLD like a growth tech stock or a leveraged infrastructure play? Those carry very different multiples.
The two numbers to track from here: debt-to-equity 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.