Shares of TeraWulf (WULF 59.89%) are flying on Thursday, up 44.1% as of 1:09 p.m. ET. The jump comes as the S&P 500 and Nasdaq Composite were down slightly.
TeraWulf, a Bitcoin miner and high-performance computing (HPC) data center company, announced it inked a 10-year, $3.7 billion deal backed by Alphabet's Google.
TeraWulf signs a massive deal for AI data center space
Along with releasing its second-quarter earnings, TeraWulf announced a major co-location deal with Fluidstack, an artificial intelligence (AI) cloud provider that will see the company provide 200 megawatts of compute power at its data center in New York. The 10-year, $3.7 billion deal has the option to be extended twice for up to a total of $8.7 billion.
Google will guarantee up to $1.8 billion if Fluidstack fails to make good on its lease obligations. In exchange, Google will be awarded warrants for 41 million shares of TeraWulf, about an 8% stake. The guarantee will allow TeraWulf to access the financing it needs to provide the 200 megawatts of compute power.

Image source: Getty Images.
TeraWulf stock is hot, but investors should exercise caution
This is the latest major data center deal as big tech races to build enough capacity to meet current and projected future demands. It's hard to overstate just the scale of the efforts. Google, Amazon, Microsoft, and Meta Platforms alone are expected to spend roughly $400 billion next year and are on track to spend more than $350 billion this year. That's not total capital expenditures (capex), that is specifically data center capex.
While this presents an enormous opportunity for data center providers, it also presents an enormous risk. I believe that the big tech companies are very purposefully making deals such as this one to offload the risk onto third parties. TeraWulf and other infrastructure companies like it are taking on enormous amounts of debt at very high interest rates. If there is an overbuild or AI demand sags, TeraWulf could find itself in a pretty precarious position.