HUT stock gains on rumored data center approval

Investing.com — Hut 8 Corp (NASDAQ:HUT) shares rose 3% following rumors that the company received approval to build a 300 MW data center in Louisiana.

The approval, which is apparently granted by the West Felician Parish Government Planning and Zoning Department on January 6, has been positively received by analysts, signaling a potentially significant expansion for the digital asset infrastructure provider.

Cantor analyst Brett Knoblauch suggested that the company is in advanced discussions with a major client, referred to as a “hyperscaler,” which has yet to be named. Knoblauch maintains an overweight rating on the stock with a price target (PT) of $35.

Similarly, Benchmark’s Mark Palmer emphasized that this development brings Hut 8 a significant step closer to commencing a “game-changing” AI data center complex. According to Palmer, the economics of the project could be highly favorable for Hut 8, comparing it to a similar deal by Core Scientific.

Investors are drawing parallels between Hut 8’s potential agreement and Core Scientific’s 12-year lease of data center capacity to CoreWeave.

Palmer noted, “Investors seeking to assess Hut’s potential upside from the first phase of the project have looked to the economics of Core Scientific’s 12-year agreement to lease 500 MW of data center capacity to AI hyperscaler CoreWeave, in which CORZ is poised to generate revenue of ~$750m and Ebitda of ~$600m during each year of the deal.”

He reiterated a buy rating on Hut 8 with an ambitious PT of $41.

The sentiment among analysts suggests that the agreement with the hyperscaler could offer Hut 8 better per MW economics than those realized by Core Scientific in its agreement with CoreWeave.

This news comes as a positive development for Hut 8, potentially increasing its revenue and Ebitda significantly if the deal follows through with favorable terms.

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