Is TeraWulf the data center stock you are looking for?

TeraWulf’s (TeraWulf Stock Quote, Chart, News, Analysts, Financials NASDAQ:WULF) third-quarter revenue exceeded analyst expectations as its data centre leasing business nearly doubled from the previous quarter, although higher operating costs pushed profitability below forecasts.

ATB Cormark Capital Markets analyst Martin Toner maintained his “Outperform” rating and US$40.00 target on the U.S. data centre developer, saying its expanding capacity and financing arrangements support longer-term growth.

“Q3/26 was a top-line beat but a miss on profitability,” Toner said in his Nov. 9 report. “Revenue was $76.2MM, ahead of our $58.4MM and the Street’s $62.5MM, as HPC lease revenue nearly doubled q/q to $63.0MM with 102 MW of revenue-generating critical IT online at quarter-end (81 MW in Q2/26).”

Adjusted EBITDA was negative US$12.8-million, compared with Toner’s forecast loss of US$8.3-million and consensus expectations for positive US$7.1-million. Operating expenses increased to US$37.7-million from US$21.7-million in the previous quarter, outpacing revenue growth. The company reported net income of US$709.5-million, but Toner said the result included a US$728.4-million non-cash gain from changes in the fair value of warrants and derivatives.

TeraWulf is expanding its high-performance computing infrastructure to serve artificial intelligence customers, including Anthropic and Fluidstack. At its Lake Mariner campus in New York, the 168-megawatt CB-4 building is under construction, with rental payments expected to begin in the fourth quarter. The similarly sized CB-5 expansion is scheduled for phased delivery beginning in early 2027. The company’s Justified development in Kentucky, associated with Anthropic, is expected to begin operations between late 2027 and the second quarter of 2028.

Toner noted that TeraWulf’s financing position has improved following the sale of its Abernathy joint venture, which is expected to generate approximately US$530-million in total proceeds. The company has received US$250-million, with another US$150-million expected by year-end and approximately US$130-million by April 2027.

TeraWulf is also seeking regulatory approval to double contracted power capacity at its Muskie development in Kentucky to 1,000 megawatts, providing further expansion potential.

“The sale of the Abernathy JV (~$530MM in total proceeds) and the doubling of contracted power at Muskie support the funding of the CB-4/CB-5 and Justified/Anthropic builds,” Toner said.

Management has said it does not intend to sign additional data centre agreements until it can finance its share of development costs without issuing more equity. Toner said the company remains confident it can secure debt financing for the remaining Anthropic development at attractive rates.

Following the results, he increased his fiscal 2026 revenue forecast by 6.2% to US$235.3-million but reduced his fiscal 2027 forecast by 7.5% to US$810.5-million because of revised project delivery schedules. He lowered his fiscal 2026 Adjusted EBITDA estimate to negative US$25.6-million from negative US$20.9-million. For fiscal 2027, Toner reduced his Adjusted EBITDA forecast to US$402.1-million from US$436.7-million. He expects revenue to reach US$2.24-billion and Adjusted EBITDA to increase to US$1.44-billion in fiscal 2028 as more leased capacity enters service.

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