TLDRs:
- Applied Digital shares jump 15% as investors focus on upcoming cloud spin-off.
- ChronoScale plan aims to scale AI workloads, keeping growth expectations high.
- Financing deals support new data centers but hinge on customer lease execution.
- Q2 earnings will reveal how fast capacity buildouts convert into recurring revenue.
Applied Digital (NASDAQ: APLD) saw a dramatic 14.6% gain on Friday, closing at $28.11, after trading in a range between $24.65 and $28.44.
The surge came as investors increasingly focused on the company’s proposed cloud-business spin-off, ChronoScale, which aims to enhance its AI-focused high-performance computing (HPC) capabilities. Trading volume reached approximately 36.1 million shares, highlighting heightened market interest ahead of the company’s fiscal second-quarter results, due after the close on Jan. 7.
The rally underscores the market’s appetite for growth plays in high-demand sectors like AI and cloud infrastructure. Applied Digital has been aggressively expanding its data-center footprint, and investors are watching closely to gauge how quickly these investments will translate into steady lease revenue streams.
Applied Digital Corporation, APLD
ChronoScale Spin-Out Drives Investor Focus
Applied Digital announced a non-binding term sheet with Nasdaq-listed Ekso Bionics in late December to combine its cloud computing operations with Ekso’s assets under a new entity called ChronoScale. The proposed venture is designed to deliver accelerated compute solutions tailored to the most demanding AI workloads.
Applied Digital would retain approximately 97% ownership in the combined entity, with the deal expected to close in the first half of 2026, subject to due diligence and regulatory approvals.
CEO Wes Cummins described the initiative as a “step toward scaling AI compute at speed and efficiency,” signaling the company’s strategic commitment to high-growth technology markets. While the plan is non-binding, market sentiment has already reacted positively, reflecting the potential for a clearer corporate focus and enhanced shareholder value.
Financing Plans Support Expansion
Financing for Applied Digital’s next-generation data centers is progressing alongside strategic initiatives. A recent filing shows a subsidiary has entered a credit agreement with Macquarie Equipment Capital to fund initial project costs.
The arrangement includes a $45 million first draw and a discretionary $55 million second draw, both at 8% annual interest with a 12-month pay-in-kind (PIK) period, during which interest accrues to principal rather than being paid in cash.
The structure ties funding availability to milestone achievements, such as securing tenants and executing leases. This approach underscores the company’s reliance on timely customer acquisition to support revenue growth, while highlighting the careful balancing act between expansion and financial discipline.
Earnings Week Puts Execution on Display
Applied Digital’s fiscal second-quarter results, covering the period ending Nov. 30, 2025, will provide investors with an updated view of its operational execution. Revenue in the previous quarter rose 84% year-over-year to $64.2 million, driven partly by low-margin tenant fit-out work, ahead of the anticipated ramp in recurring lease income.
The upcoming earnings call on Jan. 7 at 5 p.m. ET will be a critical opportunity for management to outline progress on data-center buildouts, the timeline for revenue conversion, and the broader financial outlook. Analysts will also focus on potential risks, including customer concentration, capital access, and the impact of rising financing costs on project timelines.
As 2026 begins, broader market optimism has aided high-beta technology stocks like Applied Digital, which have reacted sharply to corporate strategy updates. Investors now await concrete results to see whether the ChronoScale spin-off and associated growth plans can deliver the expected acceleration in AI-driven revenue streams.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
