Hut8 (HUT)'s third-quarter earnings report on Tuesday showed record revenue and strong profitability, but the stock fell nearly 13% after investors were disappointed by the failure to announce an AI hyperscaler tenant at its Riverbend location in Louisiana, Wall Street brokerage Benchmark said in a report Wednesday.
Analyst Mark Palmer said the drop was “short-sighted and unwarranted” and argued that the question was not if, but when, there would be a deal. He maintained his buy rating and $78 price target.
Of course, Tuesday's Hut8 plunge didn't happen in a vacuum. The broader crypto market suffered its worst decline this year, with traditional markets selling off as well, with the Nasdaq down 2%. However, HUT stock had the worst performance in the Bitcoin mining/AI infrastructure space.
HUT rose 4% to $50 early Wednesday as the broader market rebounded modestly.
Returning to results and outlook, Hut 8 CEO Asher Genuto reaffirmed that the 300 megawatt (MW) data center in West Feliciana Parish, with the potential to eventually expand toward 1 gigawatt (GW), is on schedule for late 2026, consistent with what Palmer called the company's “methodological” approach.
Palmer said traders chasing a quick pop are missing the big story. Hut 8 positions itself for long-term value rather than rushing into sub-optimal deals.
As hyperscalers and cloud providers compete for power capacity amid the AI boom, Palmer expects Riverbend to eventually find a tenant.
Genuto's comments on the conference call underscored the leadership team's focus on strategic positioning for the next decade, with Hut 8's locations in Texas, Alberta, and Louisiana forming an integrated platform that can transition between AI, high-performance computing, and Bitcoin mining as the economy demands.
Palmer also noted Genuto's market discount for Hut 8's 1,530-megawatt power pipeline, saying investors need to see execution before assigning a higher valuation.
Palmer's Buy rating and $78 price target are based on a comprehensive analysis that takes into account its development pipeline, 64% of American Bitcoin (ABTC) shares held by 8 companies, and 10,278 Bitcoins. BTC$102,821.22 Held from September 30th.
The valuation does not yet include an additional 1,255MW under exclusivity or 5,865MW under diligence, leaving potential for further upside, the report added.
Read more: Benchmark considers Hut 8 a hybrid AI – Bitcoin power play, price target doubles to $78
