Cipher Digital Stock Jumps 18% as AI Data Center Rebound Gains Steam Despite Third-Quarter Revenue Miss

Shares of Cipher Digital Inc. rose about 18% in their latest session, extending a sharp rebound in AI data center stocks after a brutal monthlong selloff.

Cipher shares gained 99 cents to $6.55, leaving the company valued at about $3 billion. The stock remains about 67% lower than a year ago.

Sector rebound

The gain followed a broader recovery in tech stocks. Cipher Digital stock jumped nearly 11% in Friday's premarket trading as technology stocks rebounded from a sharp selloff.

The move was part of a bounce across former bitcoin miners now pivoting to AI. Over the past month, Cipher Digital stock had fallen 62%, the largest drop among its AI hosting peers.

The stock had been under pressure for weeks. It had been trading near its 52-week low of $6.62.

Disappointing quarter

The rally came despite weak results. Cipher's third-quarter revenue fell 62.8% year over year to $26.701 million, missing the $38.473 million analyst estimate, while the diluted loss per share of 22 cents was in line with expectations.

The losses grew. Operating loss widened to $71.915 million from $37.617 million a year earlier, and adjusted EBITDA swung to a loss of $9.963 million from a profit of $40.790 million.

The bottom line received a non-cash boost. Cipher reported net income of $31.596 million, helped by a $127.180 million non-cash gain from changes in the fair value of its warrant liability, while interest expense climbed to $58.994 million from $1.286 million.

AI pivot

The company is in the middle of a major transition. Cipher is moving from bitcoin mining to contracted AI data center leases.

There were early signs of progress. Cipher generated its first $5.85 million in high-performance computing leasing revenue as operations began at its Black Pearl facility, and it expanded its Barber Lake lease agreement, raising total contracted revenue to about $9.1 billion.

Its AI infrastructure development pipeline reached 5.9 gigawatts.

Analysts trim targets

Analysts have lowered expectations but kept positive ratings. Wells Fargo analyst Eric Luebchow kept an Overweight rating on Cipher but cut his price target to $15 from $25.

The stock carries a consensus Buy rating and an average price forecast of $25.43.

Risks remain

Some analysts see the bounce as fragile. TIKR noted that the jump looked like a relief rally, since Cipher still missed on revenue and rent at Barber Lake starts later.

Investors will be watching whether Cipher can finish its data center buildings on schedule and start collecting lease payments as planned, along with its ability to manage rising debt costs.