KBW Lifts TeraWulf Rating and Target, Citing Rapid Shift to AI and HPC Leasing

Investment bank KBW upgraded TeraWulf (WULF) to "outperform" from "market perform" and raised its price target to $24 from $9.50, citing a faster-than-expected transition from bitcoin mining to artificial intelligence (AI) and high-performance computing (HPC) leasing as the primary growth driver.

In a report, KBW analyst Stephen Glagola argued that the market is underestimating the earnings upside from the company’s strategic pivot. "We think investors underappreciate the magnitude of the BTC mining to HPC leasing mix shift in 2026-2027 and robust growth catalysts on 646 MW net of visible HPC leasing pipeline through 2027," he wrote.

KBW highlighted a set of measurable factors supporting its more bullish stance. The bank pointed to a 646 megawatt visible HPC leasing pipeline through 2027 and estimated that existing leases could support a 505% EBITDA compound annual growth rate (CAGR) from 2025 to 2027. That prospective growth, KBW said, could justify multiple expansion from the stock’s current 13.8x EV/EBITDA valuation.

The report projects that HPC leasing will account for roughly two-thirds or more of TeraWulf's revenue in 2026, and will contribute the majority of contribution profit. KBW expects bitcoin mining to become largely immaterial to the company’s financial profile by 2027.

Share price movement reflected cautious investor sentiment at the time of the report. The shares were modestly higher in early trading at $11.18 following the upgrade, remaining below KBW’s revised target but reacting positively to the analyst’s outlook.

KBW framed its upgrade around several execution and market considerations. The bank said execution risk is lower than investors assume, pointing to secured financing for major build-outs, a track record of delivery and supportive debt markets. KBW argued that recent share price weakness in TeraWulf mirrored sector-wide selling in bitcoin miners rather than company-specific fundamentals.

As lease revenues scale in 2026, KBW expects cap-rate compression and valuation upside. The bank also noted potential upside from additional HPC deal announcements over the coming year, describing those as optionality that could further improve the company’s valuation if realized.

The analyst’s thesis follows a broader industry trend of bitcoin miners pivoting to host AI and HPC hardware in existing data center footprints to boost profitability. KBW’s assessment embeds that market dynamic, treating TeraWulf’s transition away from legacy mining operations as a structural change rather than a temporary adjustment.

KBW’s supporting metrics and near-term forecasts emphasize the centrality of the 646 MW pipeline to the investment case. The bank’s view is that those contracted or visible leasing opportunities form the foundation for the steep EBITDA growth trajectory it models for 2025–2027.

Key points from the KBW report include:

• Price target raised to $24 from $9.50 and rating upgraded to "outperform".
• 646 MW visible HPC leasing pipeline through 2027 cited as a principal growth driver.
• Estimated 505% EBITDA CAGR from 2025 to 2027 driven by existing leases.
• Current valuation at roughly 13.8x EV/EBITDA, with room for multiple expansion if lease revenues scale.
• Expectation that HPC leasing will represent roughly two-thirds or more of revenue in 2026 and dominate contribution profit, making mining largely immaterial by 2027.

KBW also addressed investor concerns about execution risk, emphasizing that financing for major builds is secured and that supportive debt markets reduce the likelihood of delivery issues. The bank suggested that the recent price weakness in the shares reflected broad selling pressure across bitcoin miners rather than deterioration in TeraWulf’s own fundamentals.

The upgrade and target increase reflect KBW’s conviction that the company can capitalize on demand for AI and HPC capacity. If the leasing pipeline converts as anticipated, the bank expects revenue mix shifts and higher lease-derived cash flows to compress capitalization rates and support a higher equity valuation.

KBW’s report positions TeraWulf as an example of how firms in the crypto mining sector are repositioning assets to serve emerging AI infrastructure demand. The bank’s revised forecast and valuation assume that visible lease commitments and additional deal flow will underpin a material reorientation of TeraWulf’s business over the next two years.

Investors will likely watch three elements closely: the pace at which HPC leases are executed, the degree to which revenue mix shifts toward leasing in 2026, and any announced new HPC deals that could add further optionality to the company’s growth profile.

Key Topics

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