cifr stock: Amazon Deal and Record Highs

Julian Vance Article:

[Generated Title]: Cipher Mining's $5.5B Amazon Deal: Genius or Gamble? A Data Analyst's Take

Alright, let's dissect this Cipher Mining (CIFR) and Amazon Web Services (AWS) deal. $5.5 billion over 15 years – that's the headline. The promise: Cipher will deliver 300 megawatts of capacity for AI workloads, starting in 2026. The market's reaction? A 33% jump in CIFR's stock price, hitting record highs. But let's not get caught up in the hype; let's dig into the numbers and see if this is a stroke of genius or a high-stakes gamble.

Digging Into the Deal

First, the good news for Cipher: They've secured a major client in the hottest sector right now: AI. The deal validates their pivot into high-performance computing (HPC), which, frankly, was telegraphed when they inked the Fluidstack and Google deal. Tyler Page, Cipher's CEO, is quoted as saying that the deal "firmly established our credibility in the HPC space." Whether it's credibility or just clever timing remains to be seen. Still, a 15-year lease provides revenue visibility (something the market loves) – assuming AWS doesn't renegotiate or find a cheaper alternative down the line.

Now, the not-so-good news. Cipher missed Q3 earnings estimates. Revenue came in at $71.71 million, short of the $78.6 million expected. They beat on adjusted earnings per share (10 cents versus an expected loss of 2 cents), but that's adjusted earnings – a metric I always view with suspicion (what exactly are they adjusting out?). The stock popped despite missing revenue estimates. That tells you this is all about the future promise, not current performance.

And that future promise rests on delivering 300 megawatts of capacity in 2026. That's a lot of power. They're planning a 1-gigawatt site in West Texas ("Colchis"), majority-financed by Cipher, with American Electric Power building the interconnection facility. The problem? That Colchis site isn't expected to be energized until 2028. So, where's the initial 300 megawatts for the AWS deal coming from? The details on this are scarce, and that's a red flag. Are they overpromising, or do they have some other capacity lined up that they haven't disclosed? (I've looked at hundreds of these filings, and that kind of ambiguity around a major contract always makes me uneasy.)

The Cooling Question

There's also the cooling issue. The press release notes that the 300 megawatts will include both air and liquid cooling to the racks. Liquid cooling is increasingly necessary for high-density AI workloads, but it adds complexity and cost. Are they factoring in the increased operational expenses associated with liquid cooling in their financial projections? The devil's always in the details, and those details are conveniently absent.

The analyst consensus price target sits at $20.57, a 5% discount to the current price. But here's the thing: those targets were set before this Amazon deal. So, they're essentially irrelevant now. Analysts will need to revise their models to incorporate this new information, and those revisions will determine whether this stock has further room to run or if it's already priced in the hype.

The options market is going wild. 222,000 calls and 80,000 puts traded – three times the usual volume. The most popular call option is the weekly 11/7 21.50-strike call. This tells me that retail investors are piling in, betting on further short-term gains. Which, frankly, makes me even more skeptical.

Is This a Sustainable Surge?

So, is this a sustainable surge, or a classic case of "buy the rumor, sell the news"? On one hand, Cipher has secured a massive deal with a blue-chip client. On the other, they missed earnings, the timeline for delivering the capacity is unclear, and the stock is trading at nosebleed levels. The risk, as I see it, is that Cipher's valuation is now almost entirely dependent on executing this AWS deal flawlessly. Any hiccups – delays, cost overruns, or technical challenges – could send the stock plummeting. As reported by Schaeffers Research, Cipher Mining Stock Hits Record Highs on Amazon Deal.

A Calculated Risk, But a Risk Nonetheless