Investment bank KBW upgraded TeraWulf (WULF) to “outperform” from “market perform” while raising its target price to $24 from $9.50.
The bank said the market underestimated the profit growth potential from the company’s move away from Bitcoin Mining for artificial intelligence and high-performance computing (HPC) rentals.
Analyst Stephen Glagola wrote in a report on Wednesday: “We believe investors are underestimating the scale of BTC mining’s shift to HPC lease portfolios in 2026 to 2027 and the strong growth catalyst of 646 MW of net HPC lease pipeline capacity visible by 2027.”
The stock was slightly higher Wednesday morning at $11.18.
Bitcoin miners are increasingly turning to hosting artificial intelligence and high-performance computing hardware in existing data centers to increase profitability.
Analysts estimate that TeraWulf’s existing leases could drive a compound annual growth rate (CAGR) of EBITDA of 505% from 2025 to 2027 and support multiple expansion at the stock’s current EV/EBITDA valuation of 13.8x.
His optimistic view centers on the company’s 646 MW HPC lease pipeline through 2027 and the mining industry’s rapid erosion of the importance of the business.
The bank expects HPC leasing to generate approximately two-thirds or more of TeraWulf’s revenue and the vast majority of contribution profits by 2026, with mining becoming less relevant by 2027.
The report said execution risks were lower than investors expected, citing secured financing for major expansion projects, a strong delivery record and support from debt markets. The recent share price weakness reflects an industry-wide sell-off among Bitcoin miners rather than company-specific fundamentals.
KBW said these discounts should narrow as lease revenue scales in 2026, driving cap rate compression and higher valuations, and new HPC deal announcements next year will bring more options.
Read more: The AI trade isn’t dead: An inside look at Wall Street’s lucrative data center deals
