Investment bank KBW upgraded TeraWulf (WULF) to "outperform" from "market perform" while raising its price target to $24 from $9.50.

The bank said the market is underestimating the earnings upside from the company’s shift away from bitcoin BTC$88,490.16 mining toward AI and high-performance computing (HPC) leasing.

"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," wrote analyst Stephen Glagola in the Wednesday report.

The shares were modestly higher in early trading Wednesday, at $11.18.

Bitcoin miners have increasingly pivoted to hosting AI and high-performance computing hardware in their existing data centers to boost profitability.

The analyst estimated that TeraWulf's existing leases could drive a 505% EBITDA compound annual growth rate (CAGR) from 2025 to 2027 and support multiple expansion from the stock’s current 13.8x EV/EBITDA valuation.

His bullish view centers on the firm's 646 megawatt HPC leasing pipeline through 2027 and the rapid erosion of mining’s importance to the business.

The bank expects HPC leasing to generate roughly two-thirds or more of TeraWulf's revenue in 2026 and the vast majority of contribution profit, with mining becoming largely immaterial by 2027.

The report said execution risk is lower than investors assume, citing secured financing for major build-outs, a track record of delivery and supportive debt markets. Recent share price weakness reflects sector-wide selling in bitcoin miners rather than company-specific fundamentals.

KBW said those discounts should narrow as lease revenues scale in 2026, driving cap-rate compression and valuation upside, with further optionality from new HPC deal announcements over the next year.

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