Spin-offs have a history of creating value. In the last five years, the S&P 500 Index ($SPX) has delivered annualized returns of almost 11.8%. During the same period, the S&P U.S. Spin-off Index has recorded annualized returns of 15.4%. That makes promising spin-off stories enticing to pay attention to.
Recently, Applied Digital (APLD) announced the closing of its transaction spinning off its cloud business to EKSO Bionics. Subsequently, EKSO changed its name to ChronoScale (CHRN), with the cloud business becoming a wholly-owned subsidiary.
It’s worth noting that Applied Digital was issued 138 million shares of ChronoScale. Further, the company invested $15.75 million in cash for an additional 1.4 million shares. With these transactions, Applied Digital owns 97% of the spun-off entity.
From an industry perspective, the global cloud computing market is expected to reach $1.9 trillion by 2030 as artificial intelligence (AI) and machine learning drive growth. Accordingly, the outlook for ChronoScale seems promising.
About ChronoScale Stock
ChronoScale is a provider of graphic processing unit (GPU) computing solutions. This enables customers to execute critical workloads related to AI, machine learning, rendering, and other high-performance computing.
The business currently operates in three states: Colorado, Minnesota, and Utah. As of December 2025, ChronoScale had one customer and had deployed a total of 6,144 GPUs.
Revenue for the fiscal year ended May 2025 was $84.4 million, which was higher by 191% on a year-over-year (YOY) basis. While the business is still at an early stage with a single customer, growth has been robust and the company will be deploying additional GPUs to boost revenue.
Being in an early stage, the business has also been incurring losses. However, that’s unlikely to be a concern with a strong backing from Applied Digital. At the same time, losses are likely to narrow with economies of scale.
In terms of price action, CHRN stock has surged by 220% in the last six months. This rally has been on the back of the impending business combination, which is now complete.
A Fresh Issue of Funds Is Likely
It’s worth noting that, as of November 2025, ChronoScale has limited cash. Further, the company has been reporting operating-level losses. For the six months ended November 2025, cash used in operations was $14.5 million. Given the early stage of the business, cash burn will likely sustain.
With the business combination, Applied Digital has infused $15.75 million in cash into ChronoScale. However, as ChronoScale deploys additional GPUs, significant equity or debt financing is in the cards.
Still, financing growth is unlikely to be a concern given the company's backing and positive industry outlook. Once growth plans are revealed, investors can expect a stock rerating.
In-line with scale-up plans, ChronoScale has also appointed Cenly Chen as its Chief Executive Officer. Chen has two decades of experience and last served as the Chief Growth Officer, Senior Vice President and Managing Director at Super Micro Computer (SMCI). This high-profile appointment is a first step toward accelerated growth and value creation for the company.
What Do Analysts Say About CHRN Stock?
Based on three analysts with coverage, CHRN stock has a consensus “Moderate Buy” rating. While one analyst has a “Strong Buy” rating for CHRN stock, two analysts believe that the stock is a “Hold.”
The mean price target of $9.50 represents potential downside of 37% from current levels.
The Bottom Line
In terms of risks, ChronoScale is generating revenue from a single customer, Together AI. The client concentration is therefore high and revenues will slump if a contract termination scenario plays out. This risk is mitigated by the fact that ChronoScale is focused on GPU-based infrastructure for high-growth areas of AI training, inference, and high-performance computing. With expansion in operations, the firm's concentration risk will likely decline with time.
Further, the equity dilution risk here is mitigated by the fact that fresh funds will be used to expand operations. This will have an impact on top-line growth and, as operations scale up, EBITDA break-even should be on the horizon.
Overall, ChronoScale looks attractive considering the structural industry tailwinds and its backing from Applied Digital. With CHRN stock being an under-the-radar name, it might be a good time for investors to consider some exposure.
On the date of publication, Faisal Humayun Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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