Secured Power Capacity And Hyperscaler Leasing Will Reshape This AI Data Center Platform

Catalysts

About Keel Infrastructure

Keel Infrastructure develops and owns power rich, institutional grade data center campuses in North America for high performance computing and AI tenants.

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

• Secured access to 2.2 gigawatts of current and potential capacity in Pennsylvania, Washington State and Quebec in a market where energy is described as a structural bottleneck for AI infrastructure, which can support long term lease backed revenue as powered land is commercialized.
• Focus on powered shell and co location for hyperscalers and neoclouds, rather than running GPUs directly, aligns Keel with customers that prefer to lease derisked facilities. This can concentrate the business on rent like revenue and limit equipment related margin pressure.
• Progress toward permits and notice to proceed at Panther Creek, Sharon and Moses Lake, with management indicating expectations for full permitted status across at least one site in the coming months, sets the company up to convert existing customer interest into long duration leases and improve visibility on future earnings.
• Potential to secure a large portion of the 1.5 gigawatt expansion capacity in the second half of 2026, with limited additional CapEx at that stage, could increase the pool of monetizable megawatts and support higher long run revenue without equivalent pressure on net margins.
• Balance sheet described as the strongest in company history, with US$520 million of liquidity and no Macquarie facility covenants, provides room to fund permitting and leasing without relying on near term equity issuance. This can support execution on growth projects while limiting financing related drag on earnings.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Keel Infrastructure's revenue will decrease by 6.0% annually over the next 3 years.
• Analysts are not forecasting that Keel Infrastructure will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Keel Infrastructure's profit margin will increase from -90.9% to the average US Software industry of 11.4% in 3 years.
• If Keel Infrastructure's profit margin were to converge on the industry average, you could expect earnings to reach $21.7 million (and earnings per share of $0.03) by about April 2029, up from -$208.5 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $238.3 million in earnings, and the most bearish expecting $-564.0 million.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 215.4x on those 2029 earnings, up from -8.3x today. This future PE is greater than the current PE for the US Software industry at 29.7x.
• 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 9.57%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The pivot away from Bitcoin toward HPC and AI data center infrastructure is still mid transition, so any delay in permitting, construction or customer onboarding at Panther Creek, Sharon and Moses Lake could extend the period before new contracts start and keep revenue and earnings under pressure while legacy Bitcoin income winds down.
• Management is intentionally waiting for permits and notice to proceed before signing long term leases with investment grade tenants. This approach may secure better terms but also risks slower lease execution and leaves future rent like revenue and cash flow timing uncertain.
• The business model depends on continued scarcity of power for AI data centers and willingness of hyperscalers and neoclouds to pay for co location capacity. Any change in power market conditions, regulation or customer build versus lease preferences could limit demand for Keel’s powered shell sites and affect revenue and net margins.
• While liquidity of US$520 million and the retirement of the Macquarie facility remove near term covenant pressure, Keel still plans to use project or parent level debt and equity or equity linked offerings to fund construction. Unfavorable financing terms or future equity issuance could weigh on earnings and dilute per share metrics.
• The company reported 2025 revenue of US$229 million and an operating loss of US$150 million with adjusted EBITDA of US$29 million. If long duration leases, higher utilization of secured megawatts and the exit from Bitcoin mining do not progress as intended, Keel could remain loss making for longer and face pressure on both net margins and earnings.

Valuation

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

• The analysts have a consensus price target of $4.81 for Keel Infrastructure based on their expectations of its future earnings growth, profit margins and other risk factors.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $3.0.
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $190.6 million, earnings will come to $21.7 million, and it would be trading on a PE ratio of 215.4x, assuming you use a discount rate of 9.6%.
• Given the current share price of $2.88, the analyst price target of $4.81 is 40.2% 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.