Applied Digital Plans Cloud Business Spin-Out and Proposes Merger with EKSO to Launch ChronoScale

Applied Digital to Spin Out Cloud Business, Proposes Business Combination with EKSO to Launch ChronoScale

Overview of the Proposed Business Combination

On December 29, 2025, Applied Digital (NASDAQ: APLD), a prominent player in the domain of high-performance data centers tailored for artificial intelligence (AI) and cloud services, announced a significant strategic move. The company has entered into a non-binding term sheet with EKSO Bionics Holdings, Inc. (Nasdaq: EKSO) for a proposed business combination. This merger aims to create "ChronoScale Corporation," a specialized platform designed specifically for accelerated GPU compute tailored to the next generation of AI workloads.

The Need for Accelerated GPU Infrastructure

As the landscape of AI and enterprise computing continues to evolve, the demand for GPU-accelerated cloud infrastructure has escalated dramatically. This proposed transaction is positioned to meet the growing needs of an industry that is increasingly capacity-constrained. By combining Applied Digital Cloud’s established operations with EKSO’s capabilities, ChronoScale is poised to become a focused platform that delivers high-performance computing at scale, essential for addressing the demanding requirements of AI.

Strategic Spin-Out Benefits

One of the most compelling features of this move is the separation of Applied Digital Cloud from its broader data center operations. This strategic spin-out will allow both entities to develop independently and pursue unique growth strategies. ChronoScale aims to meet the need for predictable performance and infrastructure control, particularly for clients who require rapid deployment without the compromises often found in generalized cloud environments.

As Wes Cummins, Chairman and CEO of Applied Digital, remarked, "ChronoScale’s design is intended to meet these requirements." The platform is expected to leverage Applied Digital Cloud’s existing infrastructure, allowing for efficient deployment and scaling of GPU-accelerated compute resources for advanced AI training and inference.

Financial Considerations and Market Position

With the proposal expected to close in the first half of 2026, Applied Digital anticipates owning approximately 97% of the merged entity, ChronoScale. The Applied Digital Cloud and EKSO businesses will continue operating independently for the time being, with EKSO exploring potential strategic transactions, including the sale of its existing operations.

As of August 31, 2025, Applied Digital Cloud reported a revenue of around $75.2 million over the previous twelve months. This figure illustrates robust growth driven by the escalating demand from enterprises and AI-native clients for dedicated accelerated compute capabilities delivered through cloud environments.

Infrastructure Agility and Alignment

ChronoScale is designed not only to address immediate compute needs but also to integrate with Applied Digital’s expanding portfolio of AI-focused facilities. This alignment promises a faster pathway to market, reducing execution risks associated with the deployment of GPU resources, as demand for AI technology continues to surge.

Applied Digital’s facilities have recently showcased their prowess by being among the early adopters of NVIDIA’s H100 GPUs, highlighting their capacity to effectively incorporate cutting-edge technology ahead of widespread market adoption.

Future Perspectives

The Proposed Transaction is not without its complexities, as it is subject to customary due diligence, regulatory approvals, and the negotiation of final binding agreements. Both companies believe that this strategic move will enhance shareholder value and further solidify their positions in the AI computing landscape.

As the sector becomes increasingly competitive, the establishment of ChronoScale represents a forward-thinking strategy designed to cater to the evolving demands of AI workloads. With a focused approach, the new entity is expected not only to thrive but also to help shape the future landscape of high-performance computing.

In summary, the proposed combination of Applied Digital’s cloud services and EKSO’s capabilities into ChronoScale signifies an exciting new chapter in the AI and cloud computing markets. This joint venture reflects the growing importance of specialized infrastructure designed to meet the future needs of advanced technology, setting the stage for innovation and rapid advancement in AI applications.