Investing.com -- TeraWulf received a bullish initiation from Citi, which launched coverage of the company with a Buy/High-Risk rating and a $36 price target, citing long-term growth opportunities tied to rising demand for high-performance computing (HPC) and artificial intelligence infrastructure.

The brokerage said accelerating enterprise adoption of agentic AI workloads is expected to drive robust demand for HPC compute, while constraints in power transmission and growing local opposition to new data center developments are limiting industry supply. Citi believes TeraWulf is well positioned to help address these bottlenecks by redeveloping industrial sites with existing grid power allocations into hyperscale AI-focused data centers.

Citi forecasts annual data center demand of 14.5 gigawatts (GW) in 2026, increasing to an average of 20 GW per year between 2027 and 2030, with most development expected in the United States. Against that backdrop, TeraWulf's target of developing 250-500 megawatts (MW) of capacity annually would represent only a small share of the broader market opportunity.

The firm highlighted TeraWulf's strategy of committing most development capital only after securing tenant leases, which it believes reduces execution risk compared with speculative development models. The company is currently building a 378 MW facility for FluidStack, backed by Google, at its Lake Mariner campus near Buffalo, New York, and is pursuing additional energy commitments in New York, Kentucky, and Maryland that could support more than 3 GW of future capacity.

While TeraWulf shares have already posted strong gains this year, Citi said the current valuation does not fully reflect the company's multi-year growth potential.

The bank noted key risks include project execution, potential pricing pressure if supply constraints ease, redevelopment and leasing risks, and the need to secure funding to support its planned pace of expansion.