Applied Digital Spins Out Cloud Unit Into ChronoScale, Pushes Debt to $5bn
NEW YORK, April 1 —
Applied Digital Corporation (APLD) is spinning off its AI cloud business into a new public entity called ChronoScale through a merger with EKSO Bionics, retaining roughly 97% ownership of the combined company.
- Total debt rising to approximately $5bn after a $2.15bn senior secured notes offering at 6.750% due 2031, priced at 98 cents on the dollar
- APLD trades at $25.34 with a -28.3x fwd P/E on $264mn TTM revenue; the cloud unit alone generated $75.2mn over the trailing twelve months
- Transaction targets an H1 2026 close, subject to shareholder approval and regulatory clearance
Why It Matters
The ChronoScale spinoff cleaves Applied Digital into two distinct stories: a pure-play AI data center landlord and a GPU cloud platform built for training and inference workloads. The separation lets each business pursue its own capital structure and growth path independently. For the parent, the pivot is clear — $16bn in 15-year hyperscaler lease commitments anchored to its Polaris Forge 2 campus in North Dakota signals a bet on long-duration infrastructure revenue over volatile cloud operations.
The $2.15bn notes offering funds the Polaris Forge 2 buildout, which will deliver 200MW of capacity to an investment-grade U.S. hyperscaler in phased deployments starting this year. That single lease is expected to generate roughly $5bn in revenue over its life. APLD jumped 25.4% on the combined announcements, suggesting the market sees the restructuring as a value unlock rather than a dilutive distraction.
But the math is aggressive. Total debt near $5bn dwarfs the company's $264mn TTM revenue base, and the -28.3x forward P/E reflects a business still burning cash as it scales. The company has also guaranteed $2.4bn toward a power generation facility tied to its data center buildout, layering additional contingent liability onto an already leveraged balance sheet.
The Risk
Execution risk is concentrated in a small number of hyperscaler relationships and a single North Dakota campus. If Polaris Forge 2 construction slips or power delivery timelines extend, APLD faces $5bn in debt service on incomplete infrastructure. A delay in the ChronoScale close past H1 2026 would also leave the cloud unit in limbo, complicating both entities' ability to raise capital independently.
For a full financial breakdown of Applied Digital, generate a free Basis Report for APLD here.
Basis Report does not hold positions in securities discussed. This is not investment advice.