Benchmark nearly doubled its price target on Hut 8 (HUT) to $165 from $85 on Tuesday, reiterating a Buy rating on the stock. At HUT’s current price near $99, that target implies around 65% upside.
Analyst Mark Palmer said the market hasn’t fully priced in how fast the company is moving. HUT dropped nearly 30% over the past six weeks, even as its operations continued to grow. The stock is still up 116% year-to-date.
The upgrade comes down to one thing: Hut 8’s pivot into AI data center infrastructure is generating real, contracted cash flows — and big ones.
Hut 8 has signed two 15-year, triple-net, take-or-pay leases at its River Bend, Louisiana campus and its Beacon Point, Texas campus. The two sites together cover 597 megawatts of IT capacity.
Palmer values those contracts at $16.8 billion in base-term lease value. If tenants exercise renewal options, that number could climb to $42.8 billion.
The Beacon Point campus in Texas was the main reason Benchmark moved its target higher. Palmer estimates the first phase alone carries $9.8 billion in base-term contract value and around $655 million in average annual net operating income.
Hut 8 recently closed a $4.25 billion bond offering through its subsidiary Beacon Point DC LLC to finance the Texas project. The senior secured notes carry a 6.129% interest rate and mature in 2042. Moody’s assigned them a Baa2 rating, which is investment-grade.
That follows a $3.25 billion raise for its River Bend project. Together, that’s $7.5 billion in non-dilutive project financing — meaning no shareholder dilution.
Palmer described the company’s strategy as converting development assets into long-term contracted cash flows to lower its cost of capital. He compared Hut 8 to a “power-first data center REIT with an embedded development machine.”
Beyond its two operational campuses, Hut 8 has more than 9 gigawatts in its development pipeline across projects under exclusivity, development, construction, and management.
For context, other Bitcoin miners including Core Scientific (CORZ), Hive Digital (HIVE), and Bit Digital (BTBT) have made similar moves into AI infrastructure. But Hut 8’s financing scale and contract size put it in a different category.
Lucid Capital Markets separately initiated coverage on HUT with a Buy rating and a price target of $226 — well above Benchmark’s $165.
Hut 8 also appointed E. Stanley O’Neal, former Merrill Lynch CEO, as the new Chair of its Board of Directors.
Benchmark noted that second-quarter results may look messy due to mark-to-market accounting on bitcoin holdings and the consolidation of American Bitcoin (ABTC), but said those factors mask the underlying AI infrastructure economics.
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