In a move that underscores the intensifying race for artificial intelligence infrastructure, shares of TeraWulf Inc. surged more than 10% on Monday, propelled by Alphabet Inc.’s Google unit increasing its stake in the data center operator. This development comes amid a broader push by tech giants to secure high-performance computing capacity, as demand for AI training and deployment skyrockets.

The catalyst was Fluidstack, a computing infrastructure provider, exercising an option to lease an additional 160 megawatts of capacity from TeraWulf, building on two 10-year deals signed just last week. According to reporting from CNBC, this expansion elevates TeraWulf’s total contracted capacity to over 360 megawatts, translating to $6.7 billion in committed revenue, with upside potential reaching $16 billion if lease extensions are activated.

Google’s Strategic Bet on AI Power

Google’s deepened involvement includes boosting its financial backstop to $3.2 billion and raising its equity stake in TeraWulf to 14%, signaling confidence in the company’s pivot from bitcoin mining to AI-focused data centers. Insiders note that this aligns with Google’s aggressive capital expenditure plans, which Google Finance data shows could exceed $70 billion this year, much of it directed toward servers and data facilities.

TeraWulf, once primarily a crypto miner, is transforming its Lake Mariner campus in New York into one of the largest AI infrastructure hubs in the U.S. The company’s CEO, Paul Prager, highlighted in a recent CNBC interview how this partnership not only funds a $1.8 billion buildout but also positions TeraWulf at the forefront of sustainable, high-density computing.

Implications for the Data Center Sector

Analysts are recalibrating expectations, with Rosenblatt Securities raising its price target on TeraWulf to $10.50 from $6, maintaining a buy rating, as detailed in a TipRanks report. This optimism stems from the deal’s structure, which includes options for Fluidstack to scale up to 1 gigawatt, potentially making TeraWulf a linchpin in Google’s AI ecosystem.

The stock’s rally—up over 40% in midday trading last Thursday following the initial AI hosting announcement—reflects investor enthusiasm for TeraWulf’s strategic shift. CoinDesk noted that the news coincides with Fluidstack’s expansion at Lake Mariner, underscoring a trend where former crypto players repurpose nuclear-powered sites for AI workloads.

Broader Market Ripples and Risks

This investment echoes Google’s broader $25 billion commitment to data centers across the U.S. electric grid, as reported in posts on X and confirmed by CNBC earlier this year. Yet, challenges loom: regulatory scrutiny over energy consumption and competition from hyperscalers like Microsoft and Amazon, whose combined capex nears $320 billion for 2025, could pressure margins.

For industry players, TeraWulf’s trajectory offers a blueprint for adaptation. With Google’s backing, the company is not just surviving the crypto downturn but thriving in AI’s ascendancy, potentially reshaping power dynamics in tech infrastructure. As Prager emphasized, this could create thousands of jobs locally while addressing the voracious energy needs of next-gen computing. Investors will watch closely as TeraWulf executes on these ambitious contracts, with the stock’s volatility serving as a barometer for AI’s infrastructure boom.