Bernstein reaffirmed its Outperform rating and $36 price target on TeraWulf (WULF) after the miner's second-quarter results showed high-performance computing revenue reaching $32 million, or 71% of the total, perhaps the clearest evidence yet that its shift from bitcoin mining to AI infrastructure is landing in reported numbers.

The brokerage and research firm, whose analysts are led by Gautam Chhugani, cast the quarter as execution on a thesis it laid out when it began covering the stock in June.

At the time, analysts called TeraWulf and peer Cipher Mining the "power landlords of AI," as The Block reported. TeraWulf now has a contracted revenue book exceeding $27 billion across three deals with Anthropic, Fluidstack, and Core42.

The stock closed at $18.07 on Aug. 5, roughly half Bernstein's target, according to the note and The Block’s crypto equities price page.

The mix has flipped

TeraWulf's 71% HPC share marks the point where the transformation stopped being a forecast, Bernstein argued.

TeraWulf has 102 IT megawatts delivered and generating revenue today, representing about $180 million in annualized recurring revenue. The firm also remains on track to reach the full 839 IT megawatts of contracted capacity by the first half of 2028, Bernstein said.

All three contracts are structured as modified gross leases carrying stabilized net operating income margins near 85%.

Notably, the Anthropic deal fits that same structure. Across its full order book, TeraWulf expects to generate over $1.5 billion in average annual NOI on $1.8 billion in average annual revenue.

Bernstein analysts asserted that this profile implies the Anthropic lease is also a modified gross arrangement at roughly 85% margins.

The cost line is creeping

Chhugani and his team stressed that the economics are not moving entirely in one direction.

Bernstein's updated guidance puts development costs at $10–12 million per IT megawatt, up from the $8–10 million range it cited for the earlier Fluidstack contracts, with the Anthropic project expected to land inside the higher band.

The figure sits well above the $7.2 million per IT megawatt Bernstein credited to TeraWulf's brownfield strategy when it initiated coverage in June, which pointed to the redevelopment of legacy industrial sites the firm then held up as the company's structural edge over new data center entrants.

The Block reported that TeraWulf's flagship Lake Mariner site saw costs edge up to about $9.1 million per megawatt in the quarter, from roughly $8.6 million previously financed.

TeraWulf also amended its Fluidstack lease, lifting total contracted revenue by about $300 million to $7.2 billion over the 10-year term while contributing $150 million toward tenant fit-out costs to secure the increase.

Muskie is the next test

Bernstein pointed to the 1-gigawatt Muskie campus in Kentucky as TeraWulf's next major growth platform. Its first phase is slated to deliver 500 megawatts in the fourth quarter of 2028, with the full gigawatt built out by 2030.

The site anchors a broader pipeline of about 3.6 gigawatts of gross power across five sites in Kentucky, Maryland, and New York.

TeraWulf has told investors that the recently announced temporary data center moratorium in New York does not materially affect its plans, since the capacity leased to Core42 and Fluidstack at Lake Mariner is already permitted.

Bernstein values TeraWulf at 21 times one-year forward EV/EBITDA on steady-state 2030 earnings, discounted back, and sunsets the bitcoin mining segment entirely by 2028.

However, Bernstein flagged TeraWulf's dependence on a small set of customers as the principal downside risk to its price target.

Gautam Chhugani maintains long positions in various crypto currencies. SG and/or its affiliates beneficially own 0.5% or more of the total issued share capital/any class of common equity securities with a net long/short position of TeraWulf.