UAV And AI Infrastructure Demand Will Drive Major Long Term Upside Potential

Catalysts

About KULR Technology Group

KULR Technology Group designs, manufactures and scales advanced, safety centric energy storage and vibration reduction solutions for high performance applications across aerospace, AI infrastructure, telecom and autonomous systems.

What are the underlying business or industry changes driving this perspective?

• Rapid adoption of UAVs, drones and autonomous robotics supported by the KULR ONE Air platform and more than 150 made in USA SKUs positions KULR to pursue a growing multibillion dollar propulsion battery market, with a focus on sustained product revenue expansion and higher gross margins.
• Growth in AI computing power and the shift toward high density, high power racks with embedded BBUs aligns with KULR ONE MAX and planned UL 9540 certified backup solutions, creating a potential pipeline for recurring infrastructure orders and long term earnings growth.
• Telecom and mission critical infrastructure operators are upgrading backup power and safety systems after high profile failures, favoring KULR’s NASA derived safety architecture and domestic supply chain, which may support premium pricing and improved net margins.
• Capacity expansion in Texas from a few thousand to a targeted 50,000 battery packs per month, with potential scaling to 100,000 and beyond, is intended to allow KULR to leverage automation and economies of scale, with a focus on improving unit economics and operating leverage as revenue grows.
• A balance sheet with approximately $140 million in cash and digital assets and no debt enables investment in R&D, production and market expansion into AI data centers, telecom and advanced mobility, with the aim of accelerating top line growth while reducing financing risk to future earnings.

Assumptions

This narrative explores a more optimistic perspective on KULR Technology Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming KULR Technology Group's revenue will grow by 73.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -133.5% today to 2.5% in 3 years time.
• The bullish analysts expect earnings to reach $2.2 million (and earnings per share of $0.0) by about December 2028, up from $-22.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $-52.1 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 392.8x on those 2028 earnings, up from -8.1x today. This future PE is greater than the current PE for the US Electrical industry at 31.3x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.2%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company’s strategy and guidance rely on a sustained super growth cycle in UAVs, drones, AI data centers and telecom infrastructure. If these secular adoption curves flatten or large customers delay or cancel deployments, KULR’s expectation of tenfold growth over three years may not materialize, which would pressure revenue growth and delay the path to positive earnings.
• Management plans to scale Texas production capacity from a few thousand battery packs per month to 50,000 and potentially 100,000. If demand falls short of these long-term capacity targets, the company could be left with underutilized facilities and automation investments, resulting in weaker gross margins and negative operating leverage that weighs on net margins.
• The business increasingly depends on safety critical, highly regulated markets such as aerospace, defense, AI data centers and telecom. Lengthy multi stage qualification cycles, stricter standards or a major safety incident in the sector could slow product approvals and adoption, reducing product revenue visibility and keeping earnings more volatile than the narrative implies.
• While the company emphasizes domestic supply chain stability, it still relies on strategically secured component partnerships worldwide and on next generation cells. Long term disruptions in cell availability, cost inflation in key components or geopolitical constraints on battery materials could erode its competitive pricing and compress gross margins and cash generation.
• The Bitcoin treasury and mining strategy is framed as a long-term value creator tied to favorable supply and demand trends. Prolonged crypto bear markets, higher than expected all in mining costs or adverse regulation could significantly reduce the value of digital assets on the balance sheet and introduce earnings volatility that undermines the thesis of stable financial strength supporting future growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for KULR Technology Group is $12.0, which represents up to two standard deviations above the consensus price target of $10.0. This valuation is based on what can be assumed as the expectations of KULR Technology Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $12.0, and the most bearish reporting a price target of just $8.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $87.3 million, earnings will come to $2.2 million, and it would be trading on a PE ratio of 392.8x, assuming you use a discount rate of 9.2%.
  
• Given the current share price of $3.93, the analyst price target of $12.0 is 67.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.