AI Infrastructure Growth
UBS Initiates Buy Coverage On AI Infrastructure Firms Citing Strong Growth Potential
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Key Points
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UBS expects CoreWeave’s revenue per gigawatt to rise from about $11 billion currently to more than $15 billion, as improved GPU economics boost the revenue generated by its capacity.
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UBS’s valuation case places CoreWeave at roughly three times its projected 2027 revenue; its $120 price target represents about 3.8 times estimated 2028 revenue.
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SemiAnalysis based its ClusterMAX assessments on production-focused tests and operational benchmarks examining reliability, performance, scalability and infrastructure management.
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Applied Digital reported fiscal 2026 fourth-quarter revenue of $258.7 million, up 407% year over year, and full-year revenue of $611.3 million, up 167%. Its long-term leases include 15-year take-or-pay agreements, and contracted lease value across its five campuses is about $36 billion.
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Core Scientific reported quarterly revenue of about $164.2 million, above the roughly $145.8 million analyst estimate, but its actual EPS of -$3.13 was substantially below the -$0.0718 estimate.
UBS initiated Buy coverage on CoreWeave with a $120 price target, implying about 38% upside from recent trading levels, citing strong AI compute demand and improving GPU economics UBS as core drivers. The investment bank also issued Buy ratings on Applied Digital and Core Scientific, signaling Wall Street confidence in former Bitcoin miners pivoting to AI infrastructure at a time when investor concerns about high debt levels may be peaking UBS.
CoreWeave's shares had declined amid aggressive debt-funded expansion and plans to issue $3 billion in convertible debt, but UBS analyst Karl Keirstead argued that leverage concerns "are peaking" UBS. The infrastructure firm also earned SemiAnalysis's Platinum ClusterMAX rating for a third straight time, remaining the only cloud provider to achieve this distinction across all three evaluations SemiAnalysis.
Revenue Per Gigawatt Expected to Climb as AI Demand Soars
UBS expects CoreWeave's revenue per gigawatt to rise from roughly $11 billion today to more than $15 billion as improved GPU economics boost the income generated from its power capacity UBS. The bank values CoreWeave at approximately 3 times its projected 2027 revenue, with the $120 price target representing about 3.8 times estimated 2028 revenue UBS. This valuation assumes CoreWeave can sustain its 112% year-over-year revenue growth trajectory while managing its $35.6 billion debt load.
Applied Digital Posts 407% Quarterly Revenue Growth
Applied Digital reported fiscal 2026 fourth-quarter revenue of $258.7 million, up 407% year over year, and full-year revenue of $611.3 million, up 167% Fox Business. The company has locked in long-term security through 15-year take-or-pay lease agreements, with contracted lease value across its five campuses totaling about $36 billion Fox Business. UBS assigned the company a Buy rating and $38 price target.
Core Scientific Beats Revenue Estimates but Falls on Earnings
Core Scientific reported quarterly revenue of about $164.2 million, exceeding the analyst estimate of roughly $145.8 million Yahoo Finance. However, the company's actual earnings per share of negative $3.13 fell substantially below the negative $0.0718 estimate, underscoring persistent profitability challenges Yahoo Finance. UBS issued a Buy rating on Core Scientific despite the earnings miss.
SemiAnalysis Validates CoreWeave's Operational Execution
SemiAnalysis based its ClusterMAX ratings on production-focused tests and operational benchmarks examining reliability, performance, scalability and infrastructure management SemiAnalysis. CoreWeave's third consecutive Platinum rating reflects superior health checks, component-lag detection, and out-of-the-box reliability that set it apart from a growing field of competitors SemiAnalysis. The independent validation addresses investor concerns about whether these repurposed Bitcoin mining firms can truly operate world-class cloud infrastructure at scale.
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