In theory yes, but because "What's up?" is a colloquial expression, and contractions are normally used in colloquial speech, the contracted version would be much more common.
I could imagine someone using "What is up?" (instead of "what's up?") to mean "what's happening" in a longer sentence, like "What is up with him these days? He's acting so strange." But all by itself, "What is up?" sounds as if you are requesting a definition of the word "up."