The Wall Street firm reportedly said the former crypto miner is emerging as a key AI data center infrastructure play, with its valuation still lagging its long-term growth prospects.
- Citi initiated coverage with a ‘Buy’ rating and a $36 price target, implying around 32% upside from Friday’s close.
- The company has transformed from a Bitcoin mining business into a developer of power-rich infrastructure for high-performance computing and AI workloads, said Citi.
- Supply constraints in power and data center capacity could create a favorable environment for companies capable of bringing new AI infrastructure online, the bank said, according to CNBC.
Citi initiated coverage of TeraWulf Inc. (WULF) with a ‘Buy’ rating and a $36 price target, implying around 39% upside from the stock’s Friday’s close. The bank has reportedly said that the energy infrastructure company still has room to climb despite the stock surging nearly 500% over the past 12 months.
WULF shares rose more than 3% in Monday morning trading following Citi’s bullish call but later erased those gains and were down about 3% at the time of writing.
WULF’s AI Infrastructure Pivot Drives Outlook
TeraWulf, previously seen by many on Wall Street as a pure play on cryptocurrency mining, has pivoted toward providing energy infrastructure for high-performance computing systems, which are used in the development of artificial intelligence. Citi analyst Michael Rollins sees more momentum for the stock as demand for HPC stays strong, according to a report in CNBC.
“The challenge is that supply constraints for large-scale deployments are not immediately abating, as power transmission remains restrained in key metro markets and community resistance to data centers (aka NIMBY-ism) has picked up. TeraWulf is one of several companies that are addressing the potential bottleneck,” he said.
While deployments remain in the early phase, TeraWulf is building a framework to develop and bring to market 250-500 MW of data center capacity each year by converting and upgrading industrial sites with existing grid power allocations into hyperscale facilities focused on HPC and AI workloads, Citi stated.
The analyst added that there are still many risks for TeraWulf, including whether the company can complete major projects on tight deadlines, along with funding risks given “the anticipated rapid pace of development.” But Citi thinks the “valuation still doesn’t reflect WULF’s multi-year growth opportunities.”
WULF Stock: Stocktwits Retail Sentiment
On Stocktwits, retail sentiment for WULF had improved to ‘neutral’ from ‘bearish’ a day ago, while message volume was ‘normal.’
Analysts in general are bullish on TeraWulf, with Koyfin data showing that all 15 of those covering the stock rate it a ‘Buy’ or ‘Strong Buy.’
The WULF stock has surged nearly 120% year-to-date.
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