- Applied Digital is spinning off its cloud platform business and combining it with EKSO to form ChronoScale
- CEO Wes Cummins said this will help with fundraising and growth efforts for the cloud unit
- Meanwhile, the company will continue with its data center expansion plans in natural gas-rich areas
You might think that data centers and cloud platforms are two peas in a pod, but to hear Applied Digital’s CEO Wes Cummins tell it, that’s not necessarily the case.
The company recently announced plans to spin off its Applied Digital Cloud business unit and combine it with EKSO Bionics Holdings to create ChronoScale Corporation. Asked why the data center operator would do such a thing, Cummins said there are three big reasons: competition, capital and concentration.
“The cloud business actually competes with the companies that we are pursuing as customers for the data center business,” he explained. That’s part of the reason Applied Digital last April classified its cloud business as a discontinued operation held for sale.
He added that spinning out the unit will also make it easier for the cloud business to get its own funding for expansion. Cummins said that while Applied Digital has raised plenty of money, that’s all going toward its data center business and expansion plans.
According to Cummins, the separation will allow ChronoScale’s executive team to really concentrate on growing the cloud business, by securing both new funding and customers.
“There’s a whole different ecosystem for funding that,” Cummings said. He added the risk profiles of the cloud business and data center business look very different. “The data center business is a real estate business with very long-term leases…And then the cloud business is more technology driven. You own GPUs or CPUs or LPUs and then you run a cloud service off of that, whether it’s a long-term arrangement or short term.”
Following the transaction, Applied Digital will still own 97% of ChronoScale. Cummins said the close ties between the two will be a boon for the cloud company.
“One of the hardest things for the cloud companies right now is to secure data center capacity, and Applied Digital is one of the largest builders of data center capacity,” he noted. “I won’t say exactly how that will play out over the next 24 months, but I do think it’s a great position for the new company.
Data center plans
Applied Digital already has two data center campuses under construction in North Dakota. Cummins previously told Fierce that it was eyeing at least two additional campuses, one somewhere in the Dakotas and the other in an unspecified southern U.S. state, with the goal of adding another two gigawatts to its pipeline.
During the company’s fiscal Q2 2026 earnings call last week, Cummins said it has already purchased some land and equipment, and will “start construction on at least one new campus by the end of January.”
“That's because we have a high degree of confidence that we're going to sign a lease with a new customer that is different,” he said on the call. Cummins told Fierce in November Applied Digital was negotiating with two potential new hyperscale customers.
Applied Digital is already seeking approval for a new facility in South Dakota’s Deuel County. The location of its second prospective new campus is more of a guessing game. But there are clues.
Cummins said he believes nuclear is the future when it comes to data center power, but that’s at least five years out. So, he said, Applied Digital is looking to site new campuses in areas rich with natural gas resources, which includes places like the Dakotas (obviously), Louisiana, Texas and Pennsylvania.
Though Texas is a notable hotbed of data center activity, Cummins said “we don’t really do anything in Texas.” By process of elimination then, it appears Louisiana could be in the running for a future Applied Digital campus, though Cummins declined to confirm this.
Meta and Hut 8 both recently announced massive new data center projects in the state, and on December 18 the Shreveport City Council signed off on an unknown company’s application to build a new data center complex in West Shreveport despite staunch opposition from residents.
Financials
FQ2 2026 revenue of $126.6 million was up 250% year on year. The company also managed to shrink its net loss by 75% to $31.2 million.