Morgan Stanley initiated coverage of bitcoin miners pivoting to AI data centers (TeraWulf, Core Scientific, Marathon Digital), highlighting sector rotation.

Morgan Stanley raised its price targets for several Bitcoin mining companies on Monday, citing improving valuations tied to their transition to data center operations.

Analyst Stephen Byrd lifted the price target on TeraWulf (WULF) to $41.50 from $37 and on Cipher Mining (CIFR) to $40.50 from $38, maintaining an "Overweight" rating on both stocks. Byrd argued that valuations tied to Bitcoin miners converting capacity into data center operations were becoming "increasingly attractive," with "significant base case upside."

TeraWulf and Cipher Mining both advanced in early trading Monday morning, with WULF rising over 3% and CIFR up 1%. Retail sentiment on Stocktwits for WULF shifted to bearish from neutral, while chatter decreased to low from normal. CIFR's retail sentiment moved to neutral from bullish, with chatter remaining normal.

The investment bank also raised its price target on MARA Holdings (MARA) to $8.50 from $8 but maintained an "Underweight" rating, indicating a more cautious outlook relative to its peers. MARA declined 0.3% in morning trading, with retail sentiment turning bearish from neutral while chatter remained high.

Morgan Stanley's bullish stance on certain Bitcoin mining companies reflects a broader industry shift toward high-performance computing and artificial intelligence infrastructure. Hut 8 Corp (HUT), Riot Platforms (RIOT), and Iren Limited (IREN) have announced similar initiatives to diversify beyond traditional Bitcoin mining.