HPC Momentum Fuels B. Riley Upgrades for Core Scientific, TeraWulf Amidst Sector Volatility

Technology Sector Witnesses Revaluation Amidst AI-Driven HPC Demand

Leading investment bank B. Riley has initiated significant adjustments to its ratings and price targets for key players within the high-performance computing (HPC) and cryptocurrency mining sectors. The firm upgraded Core Scientific (CORZ) to a "Buy" rating and reaffirmed TeraWulf (WULF) as its top pick, citing robust momentum driven by the burgeoning demand for AI infrastructure. This comes even as the broader sector recently experienced notable stock pullbacks, signaling a complex interplay of long-term growth prospects and short-term market volatility.

Analyst Firm Adjusts Ratings and Price Targets for Key Players

B. Riley announced a substantial upgrade for Core Scientific (CORZ), moving it from "Neutral" to "Buy," and simultaneously raising its price target to $30 from $17. Concurrently, TeraWulf (WULF) maintained its position as B. Riley's top pick, with its price target elevated to $22 from $14. These moves are part of a broader sector revaluation, with analysts raising price targets for HPC companies by an average of 78% and increasing 2026 earnings estimates by 5%. The primary driver behind these adjustments is the "soaring demand for power and data center capacity driven by AI deals."

Despite this optimistic outlook, market sentiment on Wednesday saw a downturn for crypto-related stocks. Core Scientific shares declined by 10%, while TeraWulf, Riot Platforms (RIOT), IREN, and Bitdeer (BTDR) all experienced losses ranging from 8% to 9%. Bitfarms (BITF) was the hardest hit, falling by 15%.

Core Scientific's Strategic Pivot and Merger Opposition

The upgrade of Core Scientific is largely predicated on the expectation that its shareholders will reject the proposed $9 billion all-stock merger with CoreWeave (CRWV). Shareholders have voiced strong dissatisfaction with the offer, citing concerns over the floating exchange ratio and the absence of a cash component. The initial offer, valued at approximately $20.40 per share, had declined to around $17 per share by late October 2025 due to a slump in CoreWeave's stock, falling below Core Scientific's market price at the time. Proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS) have also recommended that shareholders vote against the bid, emphasizing inadequate compensation and unmitigated downside risk.

B. Riley notes that despite Core Scientific being an early entrant into the HPC sector, its shares have notably lagged behind peers. The firm's $30 price target reflects a standalone valuation for Core Scientific, emphasizing the company's intrinsic value independent of the merger. CoreWeave CEO Michael Intrator has declared the offer as "best and final," stating the acquisition is "nice to have, not a need to have," further solidifying the expectation of rejection.

Financially, Core Scientific reported Q2 2025 revenue of $78.63 million, a 44.3% decrease year-over-year, though it surpassed EPS estimates by reporting ($0.04) against a consensus of ($0.07). The company holds a market capitalization of $5.91 billion, a Price-to-Earnings (P/E) ratio of -34.34, and a beta of 6.58, indicating significant volatility. Institutional ownership remains high at 88.33%.

TeraWulf Leads with Significant HPC Agreements

TeraWulf (WULF) continues to be a standout, with B. Riley reinforcing its "top pick" status. The company's robust positioning is underscored by over 400 MW in customer agreements and approximately $4 billion in capital commitments. A key development includes Google LLC's strategic involvement, which includes a 14% equity interest and a $3.2 billion backstop for Fluidstack's lease commitments. This backing, alongside a successful $400 million convertible senior notes offering due 2031, significantly bolsters TeraWulf's financial capacity for expansion.

TeraWulf is strategically pivoting from its traditional Bitcoin mining operations to become a dedicated AI/HPC data center infrastructure provider. Its competitive advantage lies in developing environmentally sustainable, industrial-scale data centers powered by zero-carbon energy sources at average costs below $0.05/kWh. This strategy allows the company to attract capital and customers efficiently, effectively functioning as a hybrid power producer and data center REIT.

For Q2 2025, TeraWulf reported revenue of $47.64 million, slightly exceeding analyst estimates, but an earnings per share (EPS) of ($0.05), missing the consensus. The company recorded a substantial net loss exceeding $79 million in Q2 2025. Valuation metrics include a debt-to-equity ratio of 3.03, a price-to-sales (P/S) ratio of 33.46, and a price-to-book (P/B) ratio of 29.21, reflecting both high leverage and strong market confidence in its future growth trajectory.

Broader Sector Revaluation and Market Dynamics

The strategic shift of Bitcoin miners like TeraWulf and Core Scientific into AI infrastructure signifies a profound transformation within the Web3 ecosystem. This repurposing of energy-intensive digital asset mining infrastructure for high-demand computing needs, particularly AI, is attracting significant corporate and investor attention. Other miners such as Riot Platforms, IREN, Bitdeer, and Bitfarms are also undergoing similar transitions, benefiting from the sector-wide revaluation by B. Riley.

This trend is fueled by the "soaring demand for power and data center capacity driven by AI deals." The global AI infrastructure market, valued at $47.23 billion in 2024, is projected to reach approximately $499.33 billion by 2034. By 2030, 70% of global data center capacity is expected to be dedicated to AI workloads, up from an estimated 33% in 2025. This creates an "arms race in AI infrastructure," with capital markets increasingly favoring AI-focused data centers with higher multiples compared to traditional miners.

The energy demands of AI are also creating new investment opportunities in power and data center infrastructure. Projections indicate electricity demand from AI data centers could more than double by 2030, from 35 gigawatts (GW) in 2024 to 78 GW, equivalent to powering the entire state of California twice over. This bottleneck in grid connection is benefiting companies like GE Vernova (GEV), a major natural gas turbine manufacturer, and EQT Corporation (EQT), the largest U.S. natural gas producer, which are critical for supplying the power needs of these expanding data centers.

Outlook and Key Factors to Monitor

Looking ahead, the sector is likely to experience continued volatility in the short term as investors reconcile analyst upgrades with recent price corrections and ongoing corporate developments. The resolution of the Core Scientific-CoreWeave merger situation will be a pivotal event, potentially unlocking significant standalone value for Core Scientific if the deal is rejected. For TeraWulf, successful execution on its HPC contracts and the continued integration of the Google partnership will be crucial for realizing its long-term potential.

The broader market will closely monitor upcoming economic reports, company earnings, and policy decisions related to AI, energy infrastructure, and the evolving regulatory landscape for digital assets. The ability of these companies to successfully pivot and capitalize on the surging demand for AI-driven HPC capacity will determine their sustained growth and valuation in this rapidly evolving technological frontier.