TeraWulf Inc. (NASDAQ:WULF) shares are trading lower Tuesday as AI cloud services stocks broadly decline, with rising inflation fears and surging bond yields souring investor appetite for high-growth companies that depend heavily on borrowed money to fund customer-driven capital spending.
- TeraWulf shares are sliding. Why is WULF stock dropping?
Rising Oil Prices and Bond Yields Squeeze Growth Stocks
Oil prices spiked overnight after the Trump administration let a temporary ceasefire with Iran expire instead of extending it, prompting Tehran to threaten a more aggressive military response. Traders took that as a sign that shipping through the Strait of Hormuz, a critical passage for global oil, could face fresh disruption, feeding worries that energy-driven inflation could reaccelerate.
That matters for stocks like TeraWulf because of how the pieces connect. When energy prices rise, inflation tends to run hotter, which makes it harder for the Federal Reserve to justify cutting interest rates. Bond markets picked up on that risk almost immediately Tuesday, pushing the 10-year Treasury yield up to 4.74% and the two-year up to 4.19%.
Higher bond yields hit AI infrastructure stocks especially hard for two reasons. First, companies like TeraWulf are valued largely on profits investors expect years from now, and rising yields make those future profits worth less in today’s dollars, since investors can now earn more just by holding bonds instead.
Second, much of the sector’s growth is tied to customer capital spending funded through borrowing, so when borrowing costs climb the way they have this week, that spending becomes more expensive to finance, which can slow down the very demand these companies are counting on to grow.
When borrowing costs climb the way they have this week, that capital spending gets more expensive to finance, which can slow down the very demand these companies are counting on to grow.
TeraWulf’s Chart Shows a Stock Still Fighting its Downtrend
TeraWulf shares are trading well below the key trend lines longer-term investors watch, sitting about 10.7% under the 20-day average of $17.56, roughly 26.5% under the 50-day average of $21.32, and around 11.6% under the 200-day average of $17.74. When a stock sits this far below its major averages, rallies tend to face more resistance than usual, since there’s a lot of overhead supply from investors looking to sell into any bounce.
The 20-day average sitting below the 50-day average points to weaker momentum over the past couple of months, but the 50-day average still holding above the 200-day average suggests the stock’s longer-term uptrend has been dented rather than fully broken. In plain terms, the bigger trend isn’t dead, but the medium-term picture still needs repair.
The MACD, which tracks whether buying or selling pressure is speeding up or slowing down, has crossed above its own signal line and is now reading positive territory on its histogram. Read together, that combination usually points to a fading downswing rather than confirmation that a new uptrend has actually taken hold.
Two price levels stand out for traders watching what comes next. On the upside, the $17.50 area is the one to watch, since it overlaps with both the 20-day and 200-day averages and could act as a ceiling if the stock tries to push higher. To the downside, $14.50 is the zone most likely to draw buyers back in if selling picks up again.
Zooming out, TeraWulf peaked in June, which also marked its 52-week high, before setting a swing low in July, meaning the stock’s recent move looks more like an early attempt to stabilize after that peak than a genuine return to an uptrend.
WULF Shares Are Slipping
WULF Price Action: TeraWulf shares were down 11.42% at $15.60 at the time of publication on Tuesday, according to Benzinga Pro.
Image: Piotr Swat/Shutterstock.com
