Investment bank KBW upgraded TerraWolf (WULF) from “market perform” to “outperform” and raised its price target from $9.50 to $24.
The bank said the market was underestimating the upside from its transition away from Bitcoin. BTC$88,518.75 Mining leases for AI and high performance computing (HPC).
“We believe investors are underestimating the magnitude of the mix shift from BTC mining to HPC leasing in 2026-2027 and the strong growth catalyst for a total visible HPC leasing pipeline of 646MW through 2027,” analyst Stephen Glagola said in a report on Wednesday.
Shares were slightly higher in early trading Wednesday at $11.18.
Bitcoin miners are increasingly focusing on hosting AI and high-performance computing hardware in existing data centers to increase profitability.
The analyst estimated that Terrawolf's existing leases could drive a compound annual growth rate (CAGR) of 505% from 2025 to 2027, supporting multiple expansions from its current EV/EBITDA valuation of 13.8x.
His bullish view centers on the company's 646 MW HPC lease pipeline through 2027 and the rapidly declining importance of mining to the business.
The bank expects HPC leasing to generate about two-thirds or more of TeraWulf's revenue and the majority of its contribution margin in 2026, and expects mining to become largely insignificant by 2027.
The report said execution risk was lower than investors expected, citing secure financing for large-scale construction, a track record of delivery and a supportive debt market. The recent share price weakness reflects a sector-wide sell-off in Bitcoin miners rather than company-specific fundamentals.
KBW said these discounts should narrow as lease revenues grow in 2026, driving cap rate compression and valuation gains, with further options added over the next year through new HPC contract announcements.
read more: The AI trade isn't over: An inside look at Wall Street's lucrative data center trades
