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UBS Affirms Buy Rating on Diamondback Energy (FANG) Following VNOM Deal

On June 4, analysts at UBS reiterated a ‘Buy’ rating and a $163 price target on Diamondback Energy, Inc. (NASDAQ:FANG).

The analysts reiterated the bullish stance after the company’s subsidiary Viper Energy Partners (NASDAQ:VNOM), announced plans to acquire Sitio Royalties in an all-equity transaction. The deal is expected to be completed by the third quarter of 2025. This will help Viper grow its land holdings in the Permian Basin by adding 25,300 acres.

A crowded drilling platform in the Western Canada Sedimentary Basin, the workers handling oil and natural gas equipment.

The transaction will be important to Diamondback Energy in enhancing Viper Energy Partners’ cash balance. It is expected to increase cash available for distributions by 8% to 10%. The acquisition will also reduce Viper Energy’s breakeven costs by about $2 per barrel, bringing it below $20 WTI. Following the acquisition, Viper Energy Partners’ production will increase by mid-single digits for the fiscal year 2026, even on stable commodity prices.

Sitio Royalties acquisition aligns with UBS’s positive outlook for Diamondback Energy as part of its strategic initiative and partnerships. Additionally, the acquisition underscores the company’s strategic adjustments and market responses.

Diamondback Energy, Inc., is an independent oil and natural gas company focused on unconventional, onshore oil and natural gas reserves in the Permian Basin of West Texas. It engages in acquiring, developing, exploring, and exploiting these resources.

While we acknowledge the potential of Diamondback Energy, Inc. (NASDAQ:FANG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FANG and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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