TeraWulf's 90% Rally: A Closer Look at the AI Infrastructure Boom and Valuation Concerns

TeraWulf (WULF) shares surged 90% last week after Alphabet expanded its investment and the company secured a major AI hosting contract with Fluidstack. The AI infrastructure boom positions TeraWulf well to benefit, but valuation remains a concern due to persistent losses and a sharp run-up. The company is transitioning from Bitcoin mining to AI infrastructure and has secured $6.7-$16 billion in contracted revenue with Fluidstack.

TeraWulf (WULF) shares surged 90% last week following significant developments in the company's strategic pivot towards AI infrastructure. The stock's performance was driven by two key events: Alphabet (GOOGL) expanding its investment and TeraWulf securing a major AI hosting contract with Fluidstack.

Alphabet, through its Google Cloud division, increased its stake in TeraWulf from 8% to 14%, providing an additional $1.4 billion in backstop financing. This deal also granted Google warrants to acquire 32.5 million shares of TeraWulf common stock, raising Google's total backstop commitment to $3.2 billion and boosting its pro forma ownership stake to 14% [1].

In parallel, TeraWulf announced a major AI hosting contract with Fluidstack, which will add a new purpose-built data center, CB-5, to its Lake Mariner campus in Western New York. The expansion will provide 160 MW of critical IT load, increasing Fluidstack's total contracted capacity at Lake Mariner to approximately 360 MW [2]. This deal represents $6.7 billion in contracted revenue, with potential to reach $16 billion through lease extensions [2].

The expansion underscores TeraWulf's strategic alignment with Google and its commitment to delivering high-density AI infrastructure. The company's CEO, Paul Prager, stated that the addition of CB-5 further deepens the strategic partnership with Google and validates TeraWulf's infrastructure capabilities [1].

While the news has fueled strong momentum, valuation remains a concern. TeraWulf continues to operate at a loss, with a net loss of $18.4 million reported for the second quarter of 2025. The company's Bitcoin mining capacity has grown significantly, but the recent halving event has increased mining costs, putting further pressure on profitability [2].

Despite these challenges, TeraWulf's transition from pure-play crypto mining to AI infrastructure positions it well to benefit from the AI infrastructure boom. The company's revenue jumped to $47.6 million in the second quarter of 2025, driven by higher Bitcoin prices and early contributions from new HPC hosting revenue streams [2]. Management has set ambitious targets, projecting average annual revenue growth of 41% over the next three years [2].

However, analysts caution that TeraWulf's success will depend on its ability to execute its expansion plans while maintaining operational efficiency and improving profitability. The stock trades at a trailing price-to-sales ratio of 25x, significantly higher than the sector average of 3.27x [2]. While price momentum is strongly bullish, the stock remains highly volatile and sensitive to shifts in broader market sentiment around AI and crypto [2].

References:
[1] https://cryptobriefing.com/terawulf-google-investment-fluidstack-expansion/
[2] https://www.tipranks.com/news/terawulf-wulf-90-rally-leaves-analysts-speechless