Applied Digital Surges 12.6% on Cloud Spin-Off Drama: Is This the Catalyst for a New Bull Run?

Summary
• Applied Digital (APLD) rockets 12.6% intraday to $27.62, defying a -104x P/E ratio and 52W low of $3.31
• Analysts at Lake Street and Citizens upgrade APLD to 'Buy' with $45 and $40 price targets post-merger
• $100M Macquarie financing and AI-driven data center demand fuel speculative frenzy

Applied Digital’s 12.6% intraday surge has ignited a firestorm in the AI infrastructure sector, driven by its spin-off of the cloud GPU business and merger with Ekso Bionics to form ChronoScale. With a 212M share turnover and 9.2% turnover rate, the stock’s volatility mirrors the broader market’s anticipation for AI-driven infrastructure plays. The move has outpaced Microsoft’s -2.1% decline, positioning APLD as a speculative darling in a sector dominated by giants.

ChronoScale Merger Unlocks Value, Ignites Retail and Institutional Frenzy
Applied Digital’s 12.6% intraday surge stems from its strategic spin-off of the cloud GPU business and merger with Ekso Bionics to form ChronoScale, a high-performance compute infrastructure entity. Lake Street’s Rob Brown highlighted the spin-off as a 'value unlock' for APLD, noting the standalone unit’s $75M annual revenue and potential to scale faster. Citizens analysts emphasized the merger’s role in sharpening APLD’s focus on AI data centers. Meanwhile, Macquarie’s $100M financing for pre-lease development further stoked optimism, as lower borrowing costs align with softer inflation data. The move has triggered a 46% jump in EKSO shares and a 2% rally in APLD, despite H.C. Wainwright downgrading EKSO to 'Neutral' due to cash-burning risks.

Data Processing Sector Volatile as Microsoft Slumps
The Data Processing & Outsourced Services sector, led by Microsoft (-2.1%), shows mixed signals. While APLD’s 12.6% surge defies sector trends, Microsoft’s decline reflects broader market skepticism toward high P/E tech stocks. APLD’s focus on AI infrastructure contrasts with Microsoft’s cloud dominance, but both face pressure from regulatory scrutiny and margin compression. The sector’s 35.99 RSI suggests overbought conditions, yet APLD’s -104x P/E and 52W range trading indicate speculative momentum. Retail investors are betting on ChronoScale’s AI potential, while institutional funds remain cautious on legacy cloud players.

Options Playbook: Leverage APLD’s Volatility with Gamma-Driven Puts and Calls
• Technical Indicators: 200D MA: $16.58 (far below), RSI: 36 (oversold), MACD: -0.89 (bearish), Bollinger Bands: $20.40–$34.02 (wide range)
• Key Levels: 30D Support: $23.89–$24.13, 200D Support: $10.30–$10.99

APLD’s -104x P/E and 36 RSI suggest oversold conditions, but the -0.89 MACD and wide Bollinger Bands indicate range-bound volatility. The 12.6% intraday surge has created a short-term overbought scenario, yet the stock remains 52W range-trading. For aggressive traders, the APLD20260109P24 put and APLD20260109C24 call offer high leverage (36.66% and 6.48%) with moderate delta (-0.26 and 0.95).

• APLD20260109P24 (Put): Strike $24, Expiry 1/9, IV 216.45%, Leverage 36.66%, Delta -0.26, Theta -0.135, Gamma 0.0367, Turnover 423,695
- IV: High volatility implies large price swings; Leverage: 36.66% amplifies returns; Delta: -0.26 suggests moderate sensitivity to price moves; Theta: -0.135 indicates rapid time decay; Gamma: 0.0367 means delta adjusts with price changes. A 5% upside to $29.00 yields a put payoff of $5.00, offering 20.8% return on a $24 strike.
• APLD20260109C24 (Call): Strike $24, Expiry 1/9, IV 62.64%, Leverage 6.48%, Delta 0.95, Theta -0.134, Gamma 0.0386, Turnover 114,615
- IV: Moderate volatility; Leverage: 6.48% balances risk/reward; Delta: 0.95 implies strong directional bias; Theta: -0.134 shows time decay; Gamma: 0.0386 indicates delta responsiveness. A 5% upside to $29.00 yields a call payoff of $5.00, offering 20.8% return on a $24 strike.

Aggressive bulls should consider APLD20260109C24 into a bounce above $27.72 (intraday high).

Backtest Applied Digital Stock Performance
The backtest of APDL's performance after a 13% intraday increase from 2022 to now shows favorable results. The 3-Day win rate is 52.97%, the 10-Day win rate is 54.95%, and the 30-Day win rate is 55.82%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 33.90% over 30 days, suggesting that APDL can deliver significant gains following the intraday surge.

ChronoScale’s Launch: A High-Stakes Gamble for APLD’s Future
Applied Digital’s 12.6% surge hinges on the success of ChronoScale, but its -104x P/E and 36 RSI suggest speculative momentum over fundamentals. The 24/7 Wall St. analysts’ $42.5 average target and Lake Street’s $45 price point indicate bullish sentiment, yet H.C. Wainwright’s EKSO downgrade warns of cash-burning risks. Traders should monitor the $24.65 intraday low and $27.72 high for directional clues. With Microsoft (-2.1%) underperforming, APLD’s AI infrastructure play could outshine legacy cloud giants—if ChronoScale delivers. Watch for $24.65 breakdown or regulatory reaction.