Key Takeaways:
Benchmark raised its Hut 8 price target to $165 from $85, saying the Beacon Point AI data center campus transforms the company's valuation.
"We are raising our price target for HUT to $165 to incorporate our estimate of the contribution of the company's Beacon Point AI data center campus, the second and larger of its two commercialized hyperscale projects," Mark Palmer, analyst at Benchmark, said.
Palmer estimates Hut 8 has secured $16.8 billion in contracted base-term lease value across its two AI campuses, with potential to reach $42.8 billion if tenants exercise renewal options. The Beacon Point first phase alone carries $9.8 billion in contract value and about $655 million in average annual net operating income, he said. The company recently completed $4.25 billion of investment-grade project financing for Beacon Point after raising $3.25 billion for River Bend.
The new target implies about 65% upside from Hut 8's current price near $100. Shares have fallen nearly 30% over the past six weeks despite what Benchmark described as strong operating momentum.
Palmer reiterated his buy rating on the stock, arguing the market has yet to fully reflect Hut 8's rapid execution. He described the company's evolution into "something akin to a power-first data center REIT with an embedded development machine."
Hut 8 has signed two 15-year, triple-net, take-or-pay leases covering 597 megawatts of IT capacity at its River Bend, Louisiana, and Beacon Point, Texas, campuses. The River Bend deal, announced in December, was a $7 billion pact with Google-backed Fluidstack.
Beyond its existing projects, Hut 8's development pipeline totals more than 9 gigawatts across projects under exclusivity, development, construction and management, providing what Benchmark called a long runway for future growth.
Bitcoin miners including Core Scientific, Hive Digital and Bit Digital have similarly repositioned portions of their power and infrastructure assets to serve AI workloads, betting that long-term contracts with hyperscale customers will generate steadier revenue than cryptocurrency mining alone.
While Benchmark expects second-quarter results to be distorted by mark-to-market accounting for bitcoin holdings and the consolidation of American Bitcoin, it said those factors obscure the underlying economics of the company's AI infrastructure business.
The nearly doubled price target from a major broker signals growing institutional conviction in Hut 8's AI infrastructure strategy. Investors will watch the company's second-quarter results, expected in August, for further evidence of the business model transition.
This article is for informational purposes only and does not constitute investment advice.
