Investment bank KBW upgraded TeraWulf (WULF) to “outperform” from “market perform” while increasing its price target from $9.50 to $24.
The bank said the market was underestimating the profit boost from the company’s move away from Bitcoin. mining to AI and high-performance computing (HPC) rental.
“We believe investors are underestimating the magnitude of the leasing mix shift between BTC mining and HPC in 2026-2027 and the strong growth catalysts on 646 MW net of the HPC leasing pipeline visible through 2027,” analyst Stephen Glagola wrote in Wednesday’s report.
Shares were slightly higher in early trading Wednesday, at $11.18.
Bitcoin miners are increasingly turning to hosting AI and high-performance computing hardware in their existing data centers to increase their profitability.
The analyst estimated that TeraWulf’s existing leases could generate an EBITDA compound annual growth rate (CAGR) of 505% from 2025 to 2027 and support multiple expansion from the stock’s current valuation of 13.8x EV/EBITDA.
His optimistic view focuses on the company’s 646-megawatt HPC leasing pipeline through 2027 and the rapid erosion of mining’s importance to the company.
The bank expects HPC leasing to generate around two-thirds or more of TeraWulf’s revenue in 2026 and the vast majority of contribution profits, with mining becoming largely immaterial by 2027.
The report says execution risk is lower than investors think, citing secured financing for major construction projects, a delivery track record and favorable debt markets. Recent stock price weakness reflects industry-wide selling of Bitcoin miners rather than company-specific fundamentals.
KBW said these discounts are expected to decline as rental income increases in 2026, leading to cap rate compression and valuation growth, with greater optionality of new HPC deal announcements over the next year.
Learn more: The AI business isn’t dead: A look at Wall Street’s lucrative data center deals
