WULF Stock Gets A ‘Buy’ From TD Cowen As The AI 'Boom' Overshadows TeraWulf’s Bitcoin Mining Roots

TD Cowen analyst Michael Elias said the 9% cap rate investors use to value TeraWulf’s data center leases was too high.

• On Monday, TD Cowen started TeraWulf at Buy with a $21 price target, about 52.5% above Friday’s close.
• The Bitcoin miner has been converting its sites into AI data centers, and Google held warrants for an estimated 8% stake.
• TD Cowen’s target was about 37% below the average of $33.58.

TeraWulf (WULF) drew a ‘Buy’ rating from TD Cowen on Monday, as the firm said that investors were undervaluing the Bitcoin (BTC) mining company’s growing AI data center business.

TD Cowen analyst Michael Elias started coverage with a $21 price target, according to TheFly. That implied about 52.5% upside from Friday's close of $13.77. Elias said the AI "boom" gave TeraWulf room to earn a richer valuation over time, arguing that the market priced the company's data center leases too conservatively.

Investors currently value that business using a 9% cap rate, Elias said, which, according to him, was too high. A cap rate is the annual return investors demand from a property's income, and a higher rate signals greater perceived risk and lowers the valuation.

Elias said the risk was lower than that rate suggested. Fluidstack, a cloud provider for AI companies, is a key data center tenant for TeraWulf. Google (GOOG) has guaranteed part of Fluidstack's lease payments, giving TeraWulf a big tech backer behind its rent.

From Bitcoin Mining To AI

That backing has been central to TeraWulf's turnaround. The company built its business mining Bitcoin and has been converting its sites into data centers that host computing power for AI customers. As part of the Fluidstack deal, Google also received warrants that could give it an estimated 8% stake in TeraWulf. Deals like this have pushed investors to reprice Bitcoin miners as AI infrastructure plays.

WULF stock traded slightly higher, up nearly 1% during pre-market hours on Monday. On Stocktwits, the retail sentiment around WULF moved to ‘bullish’ from ‘extremely bullish’ zones, while chatter around it shifted to ‘normal’ from ‘low’ levels over the past day. 

TD Cowen’s Target Trails The Street Average

TD Cowen was bullish, but its target was still well below most of Wall Street. According to Koyfin data, the 24 analysts covering WULF have an average 12-month price target of $33.58. That implies about 144% upside from Friday's close. TD Cowen's $21 target sits about 37% below that average.

Last week, Morgan Stanley (MS) raised its target to $65 from $63 on Friday, implying roughly 371% upside from its then share price of over $13.

WULF has had a rough few months. WULF has fallen about 54% from its 52-week high of $29.84. However, the stock has gained close to 20% so far this year.

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