Shares of TeraWulf Inc. (WULF) experienced a notable premarket decline on Tuesday, falling approximately 3.5% to $16.07. This movement represents a partial retracement following a substantial 16.5% surge in the previous trading session. The volatility underscores the shifting investor sentiment surrounding bitcoin miners as they increasingly pivot toward the high-demand artificial intelligence data center market.
Analyst Initiation Drives Narrative
The primary catalyst for the recent stock activity is a new research initiation from Morgan Stanley. The firm commenced coverage of TeraWulf with an "Overweight" rating, indicating an expectation that the stock will outperform its industry peers. Significantly, Morgan Stanley attached a $37 price target, which implies substantial upside from current trading levels. The bank's analysis highlighted the company's potential for data-center capacity growth and its "strong" track record in securing related agreements, framing the stock as an attractive valuation play in the bitcoin-to-data center conversion theme.
Morgan Stanley's thesis extends beyond TeraWulf, touching on a broader sector dynamic. The analysts pointed to a looming U.S. power shortfall later this decade, suggesting that bitcoin miners with established grid connections and low-cost power are uniquely positioned to address the energy bottleneck created by soaring AI demand. In the same note, the firm rated peer Cipher Mining (CIFR) as "Overweight," while assigning an "Underweight" rating to MARA Holdings (MARA).
Peer Performance and Market Context
Reaction across the mining sector was mixed in premarket action, reflecting the fast-changing narratives driving these stocks. Cipher Mining was indicated up roughly 13.7%, while Riot Platforms (RIOT) saw a gain of about 3.6%. In contrast, MARA Holdings traded down approximately 2.3%. This dispersion highlights that investor conviction is not uniform across the sector and is highly sensitive to individual company execution on the AI infrastructure strategy.
Meanwhile, the price of Bitcoin itself declined about 0.8% to near $68,466. This serves as a reminder that, despite the burgeoning AI story, miner revenues and profitability remain fundamentally tied to the cryptocurrency's market price and network economics. Periods of Bitcoin weakness can test investor patience with the capital-intensive buildouts and long-term payback periods associated with data center projects.
Execution is Key
The central investment question for TeraWulf and its peers is whether they can successfully translate their power capacity into binding, long-term AI data center contracts. If successful, this transition could re-rate these companies from being viewed as pure-play crypto volatility bets to more stable infrastructure businesses with predictable cash flows. However, significant execution risks remain. The process involves securing leases, financing large-scale buildouts, and delivering power reliably—all while competing against several other miners for the same pool of potential hyperscaler customers.
The company is scheduled to report its fourth-quarter financial results after the market closes on Wednesday, February 26. The earnings conference call, set for 4:30 p.m. ET that day, is anticipated to provide critical updates on the progress of data center contracting, future capital requirements, and the proportion of the business that can be insulated from the inherent swings of the crypto market. This event stands as the next major catalyst for the stock.
Tuesday's premarket pullback may also reflect the technical nature of recent trading. The stock's 16.5% rally on Monday occurred on heavy volume of about 65.3 million shares, with the price swinging between $14.93 and $16.83 during the session. Such momentum-driven moves, especially in thin premarket or extended-hours trading where liquidity is low and spreads can be wide, are often subject to reversals. Traders will be closely watching whether the early decline holds or fades as the regular trading session gets underway.
