Shifting from Bitcoin mining to AI computing power, the three major miners were lowered their target prices by Jefferies: easy to sign, delivery is the key

The Zhitong Finance App learned that the investment bank Jefferies lowered the target prices of TeraWulf (WULF.US), Hut 8 (HUT.US), and Cipher Digital (CIFR.US), which transformed from a Bitcoin miner to an AI infrastructure company, in the process of conducting a broader valuation review of artificial intelligence (AI) data center companies, but maintained a “buy” rating for these three companies. The agency said it has adjusted its model for AI infrastructure companies to reflect the impact of the US midterm election results and tenant change orders.

Specifically, Jefferies lowered TeraWulf's target price from $15 to $14. The adjusted target price means that the stock has room to rise by about 13% compared to Monday's closing price. Analysts said TeraWolf has significant contracted capacity, although the actual number of megawatts delivered is limited, which is why the stock still has execution discounts.

Jefferies lowered its target price for Hut 8 from $90 to $81. The adjusted price target meant that the stock had room to rise by more than 42% from Monday's closing price. Analysts said that in the long run, Hut 8 has received two leasing arrangements with strong credit support: one is fully guaranteed by Google, a subsidiary of Alphabet (GOOGL.US), and does not cause shareholding dilution; the other is directly signed with Nvidia (NVDA.US). The agency added that Hut 8's project delivery schedule is mainly concentrated in the later stages, but as construction milestones continue to advance and project financing is gradually implemented, its adjusted operating capital (AFFO) is expected to reach an inflection point.

Jefferies lowered Cipher Mining's price target from $12 to $10. The adjusted price target meant that the stock had room to rise nearly 47% from Monday's closing price. In the long run, the agency has a positive attitude towards Cipher because the company has established a diverse tenant base among a number of hyperscale cloud service providers that have received investment grade ratings or are supported by investment-grade companies. This makes it a fundable platform, although the company has yet to deliver any megawatts of AI data center capacity.

As demand for AI computing power continues to grow, more and more Bitcoin miners rely on existing power resources, land reserves, and data center infrastructure to switch to high-performance computing (HPC) and AI data center businesses. However, compared with traditional Bitcoin mining, AI infrastructure projects require more investment in construction capital, and must go through multiple steps such as power access, data center construction, equipment installation, and customer acceptance before they can actually be converted into rental revenue.

As a result, Jefferies's current price target price adjustment reflects that the AI data center industry is facing a new valuation test, and more reflects the market's repricing of project execution cycles, financing costs, and regulatory uncertainty. As the scale of AI data center investment continues to expand, the market's evaluation of related companies is also shifting from simply focusing on contract capacity and potential contract value to paying more attention to actual delivery capacity, revenue delivery speed, and return on capital.

Although Jefferies is still optimistic about the long-term development prospects of TeraWulf, Hut 8, and Cipher Digital, whether the three companies can fulfill the long-term contracts they have signed, successfully complete project financing, and achieve cash flow growth will be the key to determining whether their valuations can be re-expanded.