The 17-year-old needed emergency surgery after suffering serious head injuries in the attack, which happened in the Bilston Street underpass at around 8pm on Thursday.
Nobody has been arrested but police believe the teenager was specifically targeted and the hammer was used at the end of an argument.
The victim remains critically injured in hospital.
Interactive map of the area:
Officers are now appealing for anyone who was in the area on Thursday evening to come forward.
The attack happened in the underpass which goes under the ring road from Bilston Street, next to Wolverhampton Crown Court, to Bilston Road.
Police have already spoken to several witnesses but Detective Sergeant Chris Jones, from West Midlands Police CID, said he needs more people to come forward with information.
He added: “We understand there was an argument that ended with a man being attacked.
"He sustained serious head injuries and underwent emergency surgery last night but remains in a critical condition.
“Our officers have been able to secure vital evidence and witness accounts.
"At present we understand this was a targeted attack, but believe there are more people that have information about what happened and why.”
Anyone who was in Bilston Street on Thursday evening, or has information about the circumstances preceding the attack, is urged to contact police on 101 quoting crime number 20WV/157245Y/18.
Alternatively Crimestoppers can be contacted anonymously on 0800 555 111.