Benchmark has raised its price target on Hut 8 to $85 from $78, citing a newly announced artificial intelligence data centre agreement that it says significantly improves the durability and visibility of the company’s cash flows.
The investment firm said the structure of the deal shifts operating cost risk to the tenant while securing long-dated, backstopped revenues that strengthen Hut 8’s earnings outlook.
In a research note published on Monday, analyst Mark Palmer reiterated a buy rating on Hut 8, describing the agreement as a step-change compared with peer AI colocation transactions.
Palmer highlighted Hut 8’s partnership with Anthropic and Fluidstack, arguing that the quality of counterparties and the downside protection embedded in the deal set it apart within the sector.
The agreement centres on a 15-year triple-net lease covering an initial 245 megawatts of IT capacity at Hut 8’s River Bend campus in Louisiana.
Benchmark said the lease carries a base value of about $7 billion and includes a 3% annual rent escalator that supports predictable long-term income.
The payments under the lease are backstopped by Google, which Benchmark said materially reduces counterparty risk and enhances the overall credit profile of the transaction.