TeraWulf upgraded to outperform by KBW, with AI strategy seen fueling upside

KBW upgraded TeraWulf (WULF) to “outperform” from “market perform” and lifted its price target to $24 from $9.50, citing the company’s strategic shift from bitcoin mining to AI and high-performance computing (HPC) leasing as a major growth catalyst.

The bank said the market is undervaluing the earnings potential from TeraWulf’s transition. Analyst Stephen Glagola wrote Wednesday, “Investors underappreciate the magnitude of the BTC mining to HPC leasing mix shift in 2026–2027 and the robust growth catalysts on 646 MW net of visible HPC leasing pipeline through 2027.”

Shares were up modestly in early trading Wednesday at $11.18.

The upgrade reflects a broader industry trend of bitcoin miners repurposing existing data centers to host AI and HPC hardware, boosting profitability amid declining crypto mining margins. Glagola estimated TeraWulf’s existing leases could support a 505% EBITDA CAGR from 2025 to 2027, driving potential multiple expansion from the stock’s current 13.8x EV/EBITDA valuation.

KBW highlighted the company’s 646 MW HPC leasing pipeline through 2027 and projected that HPC operations could account for roughly two-thirds or more of revenue in 2026 and the majority of contribution profit, with bitcoin mining becoming largely immaterial by 2027.

The report noted execution risks are lower than commonly assumed, citing secured financing for major build-outs, a strong delivery track record, and favorable debt markets. KBW added that recent share weakness primarily reflects sector-wide selling rather than company-specific issues.

The bank expects these discounts to narrow as HPC lease revenues scale in 2026, driving cap-rate compression and valuation upside, with additional optionality from potential new HPC deals over the next year.