KBW lifts TeraWulf to "outperform," makes case for AI-driven rerating
KBW upgraded TeraWulf (WULF) from "market perform" to "outperform" and sharply raised its price target to $24 (from $9.50), arguing the market is underestimating the earnings upside from the company’s pivot away from bitcoin mining toward AI and high-performance computing (HPC) leasing.
Why KBW is bullish
- Analyst Stephen Glagola highlights a dramatic shift in TeraWulf’s business mix for 2026–2027 as BTC mining gives way to HPC lease revenue. He flagged a visible 646 MW HPC leasing pipeline through 2027 as the core growth driver.
- KBW estimates that TeraWulf’s existing leases could produce a 505% EBITDA CAGR between 2025 and 2027 and believes that multiple expansion is justified from the stock’s current ~13.8x EV/EBITDA valuation.
- The bank projects HPC leasing will account for roughly two‑thirds or more of revenue in 2026 and generate the vast majority of contribution profit, with mining becoming largely immaterial by 2027.
Execution and valuation outlook
- KBW says execution risk is lower than investors assume, pointing to secured financing for major builds, a track record of delivery, and supportive debt markets.
- Recent stock weakness, the note argues, reflects broad sector selling among bitcoin miners rather than company-specific problems, and should narrow as lease revenues scale in 2026—fueling cap-rate compression and valuation upside. Additional upside could come from new HPC deals over the next year.
Market reaction
- TeraWulf shares were modestly higher in early trading at about $11.18 after the note.
Bottom line: KBW sees TeraWulf’s transition to AI/HPC hosting as a potential catalyst for sharp earnings growth and a meaningful re-rating, provided the company executes on its leasing pipeline and financing plans.
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