KBW upgrades TeraWulf to outperform, cites AI/HPC leasing pivot as major growth driver

Published: 2025-12-31 14:06:35 |

KBW upgraded TeraWulf (WULF) to "outperform" from "market perform" and raised its price target to $24 from $9.50, arguing the market underestimates the company’s pivot from bitcoin mining to AI and high-performance computing (HPC) leasing. Analyst Stephen Glagola highlighted a secured 646 MW HPC leasing pipeline through 2027 and projected leases could drive a ~505% EBITDA CAGR from 2025–2027. KBW expects HPC leasing to account for roughly two-thirds or more of revenue in 2026 and become the dominant source of contribution profit by 2027, rendering bitcoin mining largely immaterial. The bank also cited lower-than-assumed execution risk due to secured financing, a delivery track record and supportive debt markets. KBW forecasts cap-rate compression and valuation upside as lease revenues scale, noting recent share weakness reflects sector-wide selling rather than company fundamentals. Key trading keywords: TeraWulf, WULF, AI leasing, HPC leasing, bitcoin mining, EBITDA CAGR, price target $24.

Bullish

KBW’s upgrade signals a materially positive re-rating potential for TeraWulf driven by a strategic revenue mix shift from bitcoin mining to higher-margin AI/HPC leasing. The firm cites a secured 646 MW HPC pipeline and projects an approximate 505% EBITDA CAGR for 2025–2027 — large, quantifiable drivers that support multiple expansion and a higher price target ($24). For traders, this news is bullish because: 1) It identifies a clear new revenue growth engine (AI/HPC leasing) likely to accelerate cashflow and margin improvement; 2) The upgrade may trigger short-term buying interest and reduce share discounts relative to peers as lease revenue announcements and financing milestones materialize; 3) Lower cited execution risk (secured financing, delivery track record) reduces event risk compared with speculative growth stories. Short-term impact: likely positive volatility and price appreciation on the upgrade and any follow-up HPC deal news or financing milestones; momentum traders may target WULF on breakout above recent resistance. Long-term impact: if lease revenues scale as forecast, expect valuation re-rating and more stable earnings, making WULF more comparable to data-center/AI infrastructure peers rather than pure miners. Risks: execution shortfalls, slower-than-expected lease ramp, macro/credit tightening, or further sector-wide crypto sell-offs could negate upside. Historical parallels: miners pivoting to hosting/colocation (e.g., Core Scientific’s hosting moves) led to revaluations when leases scaled; conversely, missed execution in similar pivots produced sharp setbacks. Traders should watch lease announcements, financing updates, EBITDA guidance, and sector flows to time entries and manage risk.