Applied Digital Surges on 250% Revenue Growth, Cloud Spinoff
The company announced blockbuster Q2 results and a plan to spin off its high-demand GPU Cloud business into a new public entity named ChronoScale.
Shares of Applied Digital (NASDAQ: APLD) surged in response to a dual catalyst of explosive revenue growth and a significant corporate restructuring aimed at unlocking shareholder value in the booming artificial intelligence sector.
The Dallas-based digital infrastructure company announced second-quarter revenue of $126.6 million, a staggering 250% increase year-over-year. The impressive top-line growth was accompanied by a major strategic announcement: Applied Digital plans to spin off its GPU Cloud business into a new, independent publicly traded company to be named ChronoScale.
This move is a direct response to the voracious market appetite for GPU capacity, driven by the rapid expansion of large language models and other AI applications. By creating ChronoScale, Applied Digital aims to establish a pure-play competitor in the high-growth cloud computing space, positioning it to more directly challenge rivals like CoreWeave. The transaction is expected to be completed in the first half of 2026, according to a report from Benzinga.
The strategic separation will allow the legacy Applied Digital business to focus on its core digital infrastructure and cryptocurrency-hosting operations, while ChronoScale can pursue a more aggressive growth strategy tailored to the AI cloud market. This separation is designed to offer investors a more distinct and focused investment thesis for each entity.
"The creation of ChronoScale will unlock the full value of our GPU Cloud business, providing it with the focus and resources needed to thrive in this high-demand environment," the company articulated in its strategic vision for the move. This separation is intended to cater to different investor profiles and attract capital specifically designated for high-growth AI infrastructure plays.
Wall Street has maintained a bullish outlook on Applied Digital, with an average analyst price target of $43 per share even before this announcement. Of the twelve analysts covering the stock, ten carry a 'Buy' or 'Strong Buy' rating, reflecting confidence in the company's growth trajectory. The recent results and strategic pivot are likely to reinforce this positive sentiment.
The company’s performance and strategy underscore the immense value being placed on the digital infrastructure that powers the AI revolution. As organizations globally race to deploy AI, the demand for the specialized computing power that companies like Applied Digital and its future spin-off ChronoScale provide is expected to continue its upward trend, creating a fertile ground for growth and competition in the years ahead.