UBS initiates five AI Infrastructure stocks, sees 36% upside

Investing.com -- UBS analyst Ryan Gravett initiated coverage of five AI data center colocation stocks with bullish ratings, citing rapid growth potential as artificial intelligence adoption accelerates and computing capacity remains constrained. The analyst noted that power access continues to be the primary limiting factor in scaling compute infrastructure.

1. Hut 8 Corp (NASDAQ: HUT) - UBS set a Buy rating with a $143 price target, implying 45% upside. The analyst believes HUT offers the best combination of factors including a sizeable pipeline, track record of value creation, and current leases with high-quality tenants. UBS forecasts $2.3 billion in revenues for 2029, approximately 10% above Street estimates. The firm estimates shares assign minimal value to a roughly 2.8 gigawatt pipeline despite recent leases creating approximately $10 per share value for each 100 megawatts. UBS Evidence Lab satellite imagery of the River Bend campus in Louisiana shows early construction progress.

2. Terawulf Inc (NASDAQ: WULF) - UBS assigned a Buy rating with a $24 price target, representing 41% upside. The analyst highlighted the company's ability to convert brownfield industrial sites at locations closer to large population centers as a differentiating factor. UBS estimates shares are pricing in less than a 10% premium to contracted asset value despite a visible path to increasing leased capacity by approximately 50% through the Muskie campus. The firm expects EBITDA of roughly $500 million in 2027, increasing to over $1.5 billion in 2029.

3. Applied Digital Corp (NASDAQ: APLD) - UBS initiated with a Buy rating and $38 price target, suggesting 35% upside. The analyst sees opportunities for estimate revisions and multiple expansion given tenant expansion options and a substantial 1.3 gigawatt backlog. UBS expects revenues of $0.9 billion in fiscal 2027, increasing approximately 90% annually to $3.4 billion by fiscal 2029, about 5% above Street estimates. The firm views APLD as a prime candidate for REIT conversion.

4. Core Scientific Inc (NASDAQ: CORZ) - UBS set a Buy rating with a $24 price target, implying 33% upside. Despite having the most geographically diverse footprint and a proven execution track record, shares trade at 12x 2028 estimated EBITDA versus peers at 13-18x. The analyst expects delivery of AMD capacity and initial expansion options to drive approximately 90% annual EBITDA growth, reaching over $1.5 billion in 2029.

5. Cipher Mining Inc (NASDAQ: CIFR) - UBS initiated coverage with a Buy rating and $23 price target, representing 25% upside. While shares trade at approximately a 30% premium to contracted asset value, the analyst believes this discounts near-term leasing opportunities that could increase contracted capacity by roughly 70%. UBS forecasts approximately $850 million of EBITDA in 2028. High concentration in Texas adds risk, but recent disclosure on Batch Zero classifications provides positive clarity on the company's longer-dated pipeline.

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