Applied Digital Cloud GPU spin should unlock significant value, says Lake Street

After Applied Digital (APLD) announced a proposed transaction to spin out its Applied Digital Cloud business and combine it with Ekso Bionics (EKSO) to form ChronoScale, Lake Street analyst Rob Brown argues that the planned spin-out of the cloud GPU business should unlock significant value, noting that public and private peers carry multi-billion valuations. This business was “largely a forgotten asset within Applied,” but the company was an earlier leader in this business and is operating 6 GPU clusters and generating $75M in annual revenue, notes the analyst, who expects this to grow more quickly as a standalone business. Lake Street has a Buy rating and $45 price target on Applied Digital shares.