Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide.
Riot Platforms (RIOT) is in focus after signing a long-term data center lease and services agreement with AMD and buying 200 acres at its Rockdale, Texas site, extending beyond pure Bitcoin mining.
See our latest analysis for Riot Platforms.
Those AMD data center agreements and the Rockdale land purchase have come alongside a 1 month share price return of 24.83% and a year to date share price return of 27.82%. The 1 year total shareholder return of 42.07% sits against a more mixed 3 month share price picture, which hints that optimism around the new data center direction is building but not in a straight line.
If you are looking beyond Bitcoin related names into AI and data infrastructure, it could be a good moment to scan other high growth tech and AI names through high growth tech and AI stocks to see what else fits your criteria.
So with Riot trading at US$18.10 and analyst targets clustered around US$26.47, plus a 3 year total return near 19x, is there still mispricing here, or are markets already baking in the AI data center growth story?
Price-to-Earnings of 41x: Is it justified?
At US$18.10 per share, Riot Platforms is trading on a P/E of 41x, which screens as expensive when you line it up against both peers and the broader US software space.
The P/E multiple compares the current share price to earnings per share, so for a company like Riot it reflects what investors are currently paying for each dollar of reported earnings. For a Bitcoin mining and infrastructure business that can see earnings move sharply with both mining economics and data center activity, a high P/E often signals that the market is attaching a premium to those earnings.
Right now, Riot's 41x P/E sits well above the US software industry average of 30.9x and the peer average of 19.7x. This suggests investors are paying a much higher price for its earnings than for many comparable names. That premium is also far above the estimated fair P/E of 9.1x referenced in the data. The market could move toward that level if expectations around future profitability and growth reset closer to that implied benchmark.
However, there are clear pressure points, including sharply weaker annual net income growth and the risk that Bitcoin mining or data center demand does not match current expectations.
Find out about the key risks to this Riot Platforms narrative.