Hut 8 shares (HUT) are trading near $100 on Wall Street as the company is making a huge change to focus on artificial intelligence instead of Bitcoin (BTC-USD) mining. Benchmark analyst Mark Palmer recently raised his price target for HUT stock from $85 to $165. The analyst kept his Buy rating on the firm because its new computer hubs are bringing in a lot of profits.
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Right now, HUT stock faces some pressure after dropping nearly 30% over the last six weeks. However, Mark Palmer believes the market does not yet see how fast the firm is expanding its new business. He wrote this report to explain why this shift into technology buildings will create more value for people who own the stock.
Analyst Points to New Beacon Point Project
The analyst almost doubled his price target for the stock to $165. This new target is about 65% higher than where the stock trades today. Palmer explained that a new project called Beacon Point in Texas is driving this growth.
He wrote that the firm is growing into something like a “power-first data center REIT with an embedded development machine”. The first part of this Texas project could bring in $655 million in average yearly operating income. This steady cash helps protect the firm against market changes.
Hut 8 Is Moving Away from Crypto Mining
Many Bitcoin mining firms are trying to change their focus. They want to build data centers for artificial intelligence because cryptocurrency mining rewards go up and down too much. Hut 8 has already signed two long-term rental contracts that last for 15 years.
These deals could bring in up to $42.8 billion if the clients decide to extend their contracts. To pay for these big AI data centers, the company raised $4.25 billion in project funding. These funds help the company build its new infrastructure without using up its own cash reserves.
Is Hut 8 a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Hut 8 stock (HUT) based on 15 unanimous Buy ratings assigned in the past three months, as indicated by the graphic below. Furthermore, the average 12-month HUT price target of $141.64 per share implies 43.3% upside potential from current levels. (See HUT stock forecast)
