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.
Palmer noted that Hut 8 avoided issuing equity or warrants, which are commonly used in comparable AI infrastructure deals, while retaining full economic ownership of the asset.
Benchmark estimates the initial River Bend phase alone is worth roughly $7.6 billion, based on contracted cash flows and the scarcity of AI-ready power assets supported by an investment-grade counterparty.
Beyond the first phase, the firm pointed to what it described as embedded expansion optionality that provides further upside potential.
This includes a right of first offer for up to 1,000 additional megawatts of capacity at the River Bend site.
Benchmark also cited a separate framework agreement that could allow the development of up to 1.05 gigawatts across Hut 8’s wider pipeline in partnership with Anthropic.
The revised $85 price target sits above Hut 8’s previous all-time high reached in 2021 and is based on a sum-of-the-parts valuation approach.
Benchmark’s valuation also factors in Hut 8’s 60% ownership stake in American Bitcoin as well as the company’s existing bitcoin holdings.
Hut 8 shares were trading just under $50 on Monday morning, near a long-term high set in October, according to market data.
The firm said the AI data centre strategy reflects Hut 8’s evolution from a pure bitcoin miner into a broader digital infrastructure developer.
At the time of reporting, Bitcoin price was $87,536.79.