NEW YORK, December 31, 2025, 10:43 ET – Applied Digital announced plans to spin out its cloud unit and merge it with Ekso Bionics, forming a new entity called ChronoScale. This strategic move aims to capitalize on the surging demand for high-performance computing resources tailored for artificial intelligence workloads. The new company is expected to position itself within a competitive landscape that increasingly prioritizes efficient access to graphics processing units (GPUs). Filings indicate that following the merger, Applied Digital would retain approximately 97% ownership of the combined company, while Ekso shareholders would hold around 3%, subject to potential dilution from any equity financing related to the transaction.
The proposed merger is based on a non-binding term sheet and is slated for completion in the first half of 2026, pending due diligence, regulatory reviews, and shareholder approvals. Applied Digital’s decision to separate its cloud operations comes as demand for dedicated AI computing capacity intensifies, as businesses strive to secure the limited GPU supply necessary for faster AI model training and inference processes.
Applied Digital’s shares experienced a rise of about 2.4%, trading at $24.65 during morning trading on the announcement. The company’s cloud division has distinguished itself by being one of the early adopters of Nvidia’s H100 GPUs, generating approximately $75.2 million in revenue in the twelve months leading up to August 31, 2025. This achievement underscores the unit’s potential value, which analysts like Rob Brown at Lake Street have noted was previously overlooked within the larger corporate structure.
Ekso Bionics, known for its innovative exoskeleton products employed in both medical and industrial contexts, saw its shares soar by about 103%, closing at $11.08 following the news. The merger is positioned to create a powerful platform aimed at meeting the needs of a market characterized by a growing appetite for AI computing resources. ChronoScale would face competition from both major cloud service providers and smaller specialized GPU operators, where factors such as pricing and chip availability are crucial for customers.
By spinning out its cloud unit, Applied Digital aims to streamline its operations, aligning the separate functions of data center development alongside a newly focused GPU cloud platform. The restructuring intends not only to enhance operational clarity but also to support Ekso’s existing operations in finding their unique growth trajectory.
The market dynamics surrounding AI computing have shifted significantly, with investors increasingly drawn to companies boasting cleaner corporate structures that can effectively meet the distinct growth demands and capital needs of the AI supply chain. The formation of ChronoScale, which will leverage Applied Digital’s established cloud capabilities along with Ekso’s technological innovations, is positioned to capitalize on these evolving trends.
As the landscape of AI technology continues to evolve, the establishment of ChronoScale could reconfigure the competitive dynamics within the sector. With a focus on advanced AI workloads and a foundation built upon robust GPU capabilities, the newly formed company is set to navigate a crowded market, where versatility and performance capabilities will be paramount.
Investors and stakeholders alike will be closely monitoring the progression of this merger, particularly as it could set a precedent for future collaborations in a fast-paced technological environment increasingly reliant on AI and advanced computing solutions.
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