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Morgan Stanley believes that Bitcoin mining companies TeraWulf and Cipher Mining have huge upside potential.
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These companies are ready for AI-driven growth as they transform into data centers.
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Still, changes in execution risks and AI spending could weigh on the bank’s stock outlook.
Morgan Stanley analysts say two Bitcoin mining stocks have huge upside potential, but that has nothing to do with the cryptocurrency’s bullish outlook.
Instead, the bank said in a Feb. 8 client note that these companies are well-positioned to transform into data centers to help fuel the artificial intelligence boom.
TeraWulf and Cipher Mining have upside potential of 159% and 158%, respectively, Morgan Stanley said in a report that began covering the stocks. Shares of both companies have surged over the past 12 months, with TeraWulf up 245% and Cipher up 183%.
The bank listed several reasons for its “unusually high” price target, including:
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AI capabilities will continue to improve exponentially
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For AI promoters and adopters, there is still a lot of value that can be created
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AI computing power demand will exceed supply
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Supply and demand imbalance is expected to ease power bottlenecks
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Current bottlenecks mean Bitcoin miners-turned-AI data centers are currently the “most attractive” option for data center developers
The analyst team, led by Stephen C. Byrd, said that TeraWulf, in particular, “has a long history of building power infrastructure and a track record of multiple repeat Bitcoin-to-DC conversion transactions with customers.” “We believe the company has a viable path to significant annual growth in power and data center capacity, and we incorporate this growth potential into our base case and bull case.”
Meanwhile, Cipher Mining “has signed multiple agreements with data center customers and has assembled a team with extensive data center construction experience,” analysts said. As of the second quarter of 2025, the company had no contracts to host AI computing power—now, it has 10-year and 15-year agreements with Google and Amazon, respectively.
From June to December 2025, the equity value of companies such as TeraWulf and Cipher Mining rose from about $7 to $18 per watt, indicating strong demand for power.
While Morgan Stanley has set a huge upside target, the bank said there are risks to its outlook. One is that these companies are unable to properly execute the transition to the data center.
“These data center projects are very large relative to the overall size of Bitcoin companies, and execution risks could lead to project delays and cost overruns,” the analysts said. “This in turn could result in more equity capital being required to fund these data center projects, which could lead to unexpected dilution and financing challenges.”
