Key Takeaways
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Jefferies analysts said companies with bitcoin mining roots have a “head start” on addressing a projected shortfall in data center capacity.
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Shares of the five former bitcoin miners tapped by Jefferies in a new report have risen between 45% and 135% year-to-date.
There’s another set of artificial intelligence plays hidden in plain sight. And their roots are in crypto.
Jefferies analysts on Thursday started coverage of a handful of bitcoin miner-turned AI data center developers, including Cipher Digital (CIFR), TeraWulf (WULF), Hut 8 (HUT), Riot (RIOT) and Core Scientific (CORZ) on Thursday, rating four of them a buy, and giving one a hold rating. The investment bank’s mostly bullish report on those stocks lands after the group’s torrid climb, with their stocks rising between 45% and 135% year-to-date—and the firm suggests that four of them can keep climbing.
These companies, the analysts say, have a power edge, with some already generating data center revenue or landing lease agreements with hyperscalers. Their ability to develop their capabilities this year will differentiate them, according to Jeffries.
WHY THIS MATTERS TO YOU
Bitcoin miners-turned data center developers are getting a warm reception from Wall Street analysts amid outsize investor demand for all things AI related.
“One of the largest bottlenecks is interconnected power, which is where these developers have a head start, as they are repurposing power sourced for BTC mining to pivot toward AI data center development,” the firm’s equity analyst Jonathan Petersen and his team said in their report.
The firm estimates that roughly 66 gigawatts of AI data center capacity will come online over the next five years, but the companies the bank covers only account for about 17%. Demand is likely to outstrip supply, which is where the former bitcoin miners’ efforts to convert their power footprints would come in, the firm said.
Price targets set on the stocks that received a bullish rating—Cipher, Terawulf, Hut 8, and Core Scientific—imply upside between 18% and 48% from recent levels. The price target set on Riot, which received a neutral rating, is roughly where shares traded lately. Analysts tracked by Visible Alpha covering those stocks all have bullish ratings on them.
Shares of the buy-rated stocks are up between roughly 1% and near 5% so far Thursday. Read Investopedia’s live coverage of today’s trading here.
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