Welcome to the Best Ideas Club. Our Sunday reports cover one actionable, high-conviction investment idea sourced from an interview with a world-class investor. |
This week we interviewed 30-year investing veteran Rhys Williams, chief strategist and portfolio manager for Wayve Capital, a multi-strategy investment firm that works across public and private markets. |
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Rhys Williams’ Best Idea: Hut 8 (HUT) |
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Thesis: |
No investment theme has dominated markets like artificial intelligence in recent years. Tech giants like Meta, Microsoft and Alphabet are betting big on this trend, pouring hundreds of billions for investment into AI data centers and energy infrastructure. |
Hut 8 is an under-the-radar stock positioned to capitalize on this boom because it’s still masquerading as — and therefore mispriced as — a bitcoin miner, according to Williams, who’s firm holds a position in the stock. |
He sees the stock surging about 60% by the end of 2026 from its February 14, 2025 closing price of $20.47 per share. |
That’s because the company’s core competency isn’t mining bitcoin — it’s building low-cost data centers and securing cheap energy. |
Traditionally, bitcoin mining is a boom-and-bust business that’s tied to cryptocurrency and its halving cycles. As a result, bitcoin itself has often outperformed its miners, a pattern also seen with gold and silver miners relative to their commodities. |
Currently, the average analyst estimate for Hut 8 is $34.67 per share, based on 9 forecasts. That represents 69% upside from current levels, similar to Williams’ estimate. |
The re-rating opportunity |
Hut 8’s transition to leasing data centers offers a more stable revenue stream and the potential for a significant valuation re-rating. |
Even conservative estimates suggest AI demand for data centers will skyrocket, and bitcoin miners are uniquely positioned to supply that capacity. |
Yet the market still prices Hut 8 like a bitcoin miner: |
Hut 8 trades at a P/E of ~7x, similar to other bitcoin miners AI infrastructure stocks trade at P/Es around 25x
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If Hut 8 executes its transition, Williams sees a clear path to a multiple expansion, unlocking that 60% upside potential in its stock price. |
Over the last year, Hut 8 has returned more than 100%, outpacing competitors like IREN (+56%), HIVE (-34%), CLSK (-41%), MARA (-42%) and BITF (-59%). |
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That’s happened alongside the growing popularity among investors of both AI and bitcoin. |
Notable catalysts: |
AI data center expansion: Hut 8 has approval for a new data center in Louisiana, which Williams expects to be a major hyper-scaler that opens the door to large contracts in the future. Consulting arm: Hut 8 operates a small but growing consulting business, helping other companies scout data center locations and secure energy agreements — a potential pipeline for new customers. First-mover advantage: Compared to its bitcoin mining peers, Hut 8 is the further along in its AI pivot.
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Risks: |
Short-term Bitcoin mining struggles: Mining is currently unprofitable, which could weigh on earnings in the coming quarters Execution risk: Hut 8 must secure major customers to make its AI pivot successful AI demand fluctuations: If AI infrastructure spending slows, data center demand could weaken High volatility: Hut 8 remains a small-cap stock in a historically cyclical industry, meaning sharp price swings are likely
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For more about Rhys Williams’ work and company, visit here. |
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