Hut 8’s AI data center deal is bigger than meets the eye: Benchmark lifts price target to $85

Wall Street broker Benchmark said bitcoin miner Hut 8 (HUT) is using last week’s River Bend announcement to cement a shift from a crypto-first power owner into an institutional-grade digital infrastructure platform.

Analyst Mark Palmer said the structure, counterparties and cash-flow quality separate HUT’s deal from the wave of recent AI data center agreements. He reiterated his buy rating on the stock and lifted his price target to $85 from $77, suggesting 93% upside from Friday’s close of $44.12. Shares are higher by 2.8% premarket to $45.34.

Last Wednesday, Hut 8 signed a $7 billion, 15-year AI data center lease with Fluidstack for its RIver Bend data center in Louisiana. Shares gained as much as 20% following the news.

“The transaction combined superior deal economics relative to peer deals, long-dated, investment-grade-backstopped cash flows, and multiple layers of embedded expansion optionality across three counterparties,” Palmer said.

Palmer’s sum-of-the-parts (SOTP) valuation includes the River Bend lease value, potential future expansion capacity under a right of first offer granted to Fluidstack, Hut 8’s stake in American Bitcoin Corp. (ABTC), and the bitcoin held on its balance sheet as of Sept. 30.

Palmer said a key point is timing. Management didn’t rush to monetize power assets early in the AI infrastructure land grab, waiting instead for a configuration that met internal return hurdles and strategic criteria.

He flagged the 15-year payment backstop from Google (GOOG) as a meaningful de-risking feature that, in his view, lowers counterparty risk while allowing Hut 8 to keep full economic ownership without warrants or equity sweeteners that have shown up in other deals.

The report noted that three five-year renewal options could lift total contract value to about $17.7 billion.

Benchmark said it values the initial 245 megawatt (MW) River Bend tranche at roughly $7.6 billion, reflecting contracted cash flows and the scarcity value of AI-ready power supported by an investment-grade backstop.

Rival broker Cantor Fitzgerald last week raised its Hut 8 price target to $72 from $64, while Canaccord raised its target to $62 from $54.

Read more: Hut 8 price target boosted at Cantor and Canaccord after Google-backed AI deal