Benchmark nearly doubles Hut 8 price target to $165 on Beacon Point AI data center deal

Wall Street broker Benchmark nearly doubled its price target on Hut 8 (HUT) to $165 from $85, saying the commercialization of the company's Beacon Point AI data center campus significantly increases its valuation and reinforces its transition into an AI infrastructure developer.

That would be about 65% upside from Hut 8's current price near $100.

Analyst Mark Palmer reiterated his buy rating on the stock, arguing that the market has yet to fully reflect Hut 8's rapid execution after the stock fell nearly 30% over the past six weeks despite what Benchmark described as strong operating momentum.

"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, and to reflect the acceleration of its evolution into something akin to a power-first data center REIT with an embedded development machine," analyst Mark Palmer said in the Tuesday report.

Bitcoin BTC $ 65,260.74 miners are increasingly expanding beyond their core business into AI and high-performance computing infrastructure, seeking to capitalize on surging demand for data center capacity amid more volatile bitcoin mining margins.

Companies including Hut 8, Core Scientific (CORZ), Hive Digital (HIVE) and Bit Digital (BTBT) have repositioned portions of their power and infrastructure assets to serve AI workloads, betting that long-term contracts with hyperscale customers will generate steadier, higher-margin revenue than cryptocurrency mining alone.

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. According to Palmer, the agreements represent $16.8 billion in contracted base-term lease value and could rise to $42.8 billion if tenants exercise renewal options.

Palmer said the Beacon Point agreement was the primary driver behind the higher valuation. The broker estimated that the project's first phase alone carries $9.8 billion in base-term contract value and about $655 million in average annual net operating income.

He also pointed to Hut 8's financing strategy, noting the company recently completed $4.25 billion of investment-grade project financing for Beacon Point after raising $3.25 billion for River Bend. The deals validate management's strategy of lowering its cost of capital by converting development assets into long-term contracted cash flows.

Beyond its existing projects, the report highlighted Hut 8's development pipeline, which totals more than 9 gigawatts across projects under exclusivity, development, construction and management, providing what it called a long runway for future growth.

While the broker expects second-quarter results to be distorted by mark-to-market accounting for bitcoin holdings and the consolidation of American Bitcoin (ABTC), it said those factors obscure the underlying economics of the company's AI infrastructure business.

CEX trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11T and RWA perpetual volumes surging to a record $311B.

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