UBS forecasts up to 45% upside potential across a basket of AI data center stocks, led by crypto-mining-turned-AI-operator Hut 8 and including Core Scientific.

UBS is making a broad bullish call on a group of former Bitcoin miners converting their power assets into AI data center infrastructure, initiating coverage on five stocks with an average upside of 36% despite a sharp pullback in the sector over recent months.

In a research note dated September 22, analyst Ryan Gravett argued that the companies' legacy cryptomining operations have given them a critical advantage in today's computing landscape: access to power. Electricity availability remains the primary constraint on scaling compute capacity, and these firms have already secured roughly 5 gigawatts of leased capacity representing about $125 billion in contracted revenues. UBS projects average annual EBITDA growth of approximately 80% for the coverage group from 2027 to 2029, about 10 percentage points above consensus estimates for the final year.

**Hut 8 Corp (HUT)** received the most aggressive call, with a $143 price target implying 45% upside. UBS cited the company's sizeable development pipeline, track record of value creation, and existing leases with high-quality tenants. The firm forecasts $2.3 billion in revenue for 2029, approximately 10% above Street estimates. Satellite imagery from UBS Evidence Lab of the River Bend campus in Louisiana shows early construction progress. Recent leases have created roughly $10 per share in value for each 100 megawatts contracted.

**TeraWulf Inc (WULF)** earned a $24 target, representing 41% upside. UBS highlighted the company's ability to convert brownfield industrial sites near large population centers as a key differentiator, estimating that recent transactions imply around $12 million in equity value per megawatt. Potential value creation could reach up to $30 per share if TeraWulf fully leases its current development portfolio. UBS expects EBITDA of roughly $500 million in 2027, rising to over $1.5 billion by 2029.

**Applied Digital Corp (APLD)** received a $38 price target, suggesting 35% upside. UBS sees room for estimate revisions and multiple expansion given tenant expansion options and a substantial 1.3 gigawatt backlog. Revenue is projected to reach $0.9 billion in fiscal 2027 and grow roughly 90% annually to $3.4 billion by fiscal 2029, about 5% above consensus. The firm also views APLD as a prime candidate for REIT conversion.

**Core Scientific Inc (CORZ)** was assigned a $24 target, implying 33% upside. Despite having the most geographically diverse footprint and a proven execution record, UBS noted that the stock trades at 12 times estimated 2028 EBITDA versus peers at 13 to 18 times. The analyst expects delivery of AMD-backed capacity and initial expansion options to drive approximately 90% annual EBITDA growth, reaching over $1.5 billion in 2029.

**Cipher Mining Inc (CIFR)** rounded out the group with a $23 target, representing 25% upside. Shares trade at roughly a 30% premium to contracted asset value, though UBS argued the market is discounting near-term leasing opportunities that could increase contracted capacity by about 70%. The firm forecasts approximately $850 million of EBITDA in 2028. High concentration in Texas adds risk, though recent disclosure on Batch Zero classifications provided clarity on the company's longer-dated pipeline.

UBS is not alone in its optimism. Wells Fargo initiated coverage of the same four Bitcoin miners the previous week, citing contracted power, tenant quality, and execution as key differentiating factors. The convergence of two major banks on the same thesis underscores how Wall Street is increasingly viewing former crypto miners as the next wave of data center operators.

For Hut 8, UBS emphasized that the structure of its contracted portfolio limits exposure to delivery penalties and construction cost overruns. Key catalysts include final Base Load designation and initial energization at the Beacon Point site, followed by capacity deliveries and new lease announcements. For Cipher Mining, uncertainty around the timeline for bringing power online in Texas has weighed on shares, but UBS argued this has created an attractive risk-reward setup, with near-term catalysts including capacity deliveries, greater clarity around the development pipeline, and additional lease announcements.

All four stocks covered by the note traded lower in morning trading on the day of initiation amid general market weakness, with HUT falling nearly 2%, WULF down more than 1.5%, CIFR edging 0.3% lower, and CORZ trading flat.

UBS's thesis rests on a structural shift in the data center industry. As AI model developers face constrained computing capacity, companies that control power access and have large development pipelines are positioned to capture outsized growth. The legacy cryptomining operations that once seemed like stranded assets have become strategic advantages, with grid connections already in place and brownfield sites ready for conversion. The $125 billion in contracted revenues across the coverage group represents a significant base of recurring income that UBS believes the market has not fully priced in. With average annual EBITDA growth projected at 80% through 2029, the firm's analysts view the recent 45% drawdown as an overreaction to short-term headwinds rather than a reflection of deteriorating fundamentals.