These 3 Small-Caps Make for a Powerful Bitcoin/AI Play
This intersection of two seemingly unrelated themes is starting to be recognized.
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The two major investment themes with the most upside in the market today are artificial intelligence and Bitcoin. AI has been powering the indexes to a steady diet of new highs, while Bitcoin IBIT has made some giant moves but is extremely volatile.
The two themes seem totally unrelated, but an intersection is starting to be recognized. The intersection is that both themes require tremendous computing power, and data centers operated by crypto miners can serve both enterprises.
Crypto miners such as Core Scientific CORZ, Hut 8 HUT, and Iris Energy IREN are partnering with AI players that need huge amounts of computing power. These miners create new bitcoins and have tremendous potential upside from their stockpiled inventory, but they also have the ability to pivot to artificial intelligence data centers.
On Tuesday night, Bernstein initiated coverage of IREN with an "Outperform" rating and a $26 price target. The analyst states, "Bitcoin miners are emerging as attractive partners to build out artificial intelligence data centers with 'ready power interconnect' and data center operating capabilities."
The firm says Iris Energy has one of the strongest power pipelines at greater than 2GW and strong capabilities in data center operations. It expects 15% of the company's power capacity to pivot to AI data centers, mostly on a co-hosting model.
Bernstein also started coverage of CORZ with an outperform and a $17 price target. HUT recently signed an agreement for 205 MW capacity in West Texas for use in Bitcoin mining and high-performance computing services. CORZ has an average price target of $15.70, and HUT has an average target of $15.37.
These stocks have high levels of volatility as they react to price moves in the cryptocurrency market, but they all exhibited very good relative strength during the recent Bitcoin selloff.
If you want exposure to AI and the potential for Bitcoin upside, then take a look at these stocks.
At the time of publication, DePorre was long IREN, CORZ, and HUT.
