Compass Point analysts Michael Donovan and Ed Engel highlight that the market is undervaluing future AI data center contracts, despite substantial signed agreements.
By Helene Braun|Edited by Stephen Alpher Jul 9, 2026, 3:53 p.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on (Getty Images)SummaryShow- According to Compass Point, Applied Digital, TeraWulf, and Cipher Mining are undervalued relative to their signed AI data center contracts.
- The analysts suggest that AI infrastructure firms should be assessed based on their rental income from contracts, rather than the volatility of bitcoin mining.
- They predict that the completion of projects and the start of rental payments in the next two years will be crucial for stock performance.
A report from Compass Point indicates that several companies transitioning former bitcoin mining facilities into AI data centers may possess greater value than what their current market prices suggest, as investors seem to overlook the worth of their existing customer contracts.
Analysts Michael Donovan and Ed Engel established a framework that distinguishes the value of long-term AI leases already secured from projects that have not yet attracted customers. They contend that these firms should be valued more like landlords generating rental income rather than typical bitcoin miners whose profits are tied to cryptocurrency market fluctuations.
Compass Point's methodology involves estimating the potential rental revenue from signed contracts while factoring in the remaining construction costs of each facility. This estimate is then compared to each company's enterprise value to determine how much, if anything, investors are willing to pay for future projects.
Using this approach, the firm identified Applied Digital (APLD), TeraWulf (WULF), and Cipher Mining (CIFR) as having the most significant disparity between their contracted business and present market valuations. In these instances, Compass Point believes the market assigns little to no value to additional AI capacity waiting to be leased, despite the likelihood of these projects generating substantial rental income once they are operational.
Core Scientific (CORZ) and Riot Platforms (RIOT) are highlighted for different reasons. Compass Point noted that Core Scientific's existing contracts are largely reflected in its current valuation, meaning any future gains will depend on acquiring new customers. On the other hand, Riot is valued more on its potential rather than its current rental income, as investors are optimistic about its Corsicana site and broader AI development plans, even with its currently limited contracted capacity.
The report posits that the upcoming two years will be pivotal for the industry as firms transition from announcing AI infrastructure agreements to actual implementation. As projects finalize, tenants will begin moving in and rental payments will commence, providing investors with a clearer understanding of the steady cash flow these facilities can produce. Companies that perform well in this area could see their valuations align more closely with other revenue-generating infrastructure assets.
This sector has emerged as one of the most robust AI-related trades in the market. Over the past year, shares of various former bitcoin miners have surged as they revealed collaborations with hyperscalers and AI enterprises in need of substantial power and computing resources. However, returns have varied as investors consider construction schedules, financing needs, and the speed of customer acquisitions.
The broader shift illustrates how many mining companies are repurposing sites with abundant energy and existing electrical infrastructure for AI and high-performance computing tasks. Unlike bitcoin mining, where income can fluctuate with cryptocurrency prices, long-term agreements with creditworthy clients provide the potential for more stable and predictable cash flow.
Following recent downturns in the sector, Compass Point noted that the market might be entering a new stage where the execution of projects takes precedence over mere announcements. As facilities become operational and signed contracts start generating revenue, the firm anticipates that investors will shift their focus from future prospects to the cash flow produced by these projects.
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Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
By CoinDesk ResearchJul 7, 2026Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
Why it matters:
Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
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