Morgan Stanley initiated coverage of bitcoin miners that are repositioning their operations toward AI infrastructure, arguing that companies with substantial, grid-connected power footprints could become preferred partners for hyperscale AI developers seeking rapid access to electricity-backed compute capacity.
The firm said power supply has emerged as the primary constraint on AI infrastructure growth, elevating the attractiveness of existing bitcoin mining campuses as potential sites for data center conversion. According to Morgan Stanley, owners of "powered shell" assets - facilities with substantial on-site power and grid interconnections - can extract favorable lease economics as AI firms race to secure electricity and accelerate deployments.
The brokerage expects demand for compute to persistently outstrip available supply, and it warned that U.S. data center developers could still confront power shortages through 2028 even if all major bitcoin mining locations were repurposed to handle AI workloads. That backdrop, Morgan Stanley argued, supports long-term value creation for companies that already control grid-ready power assets.
In its initial coverage, Morgan Stanley assigned Overweight ratings to Hut 8 Mining and Riot Platforms while giving Applied Digital an Equal-weight rating. The firm selected Hut 8 as its top pick and set a price target of $263, a level the report said implies roughly 141% upside from prevailing share prices.
Hut 8 was described as having consistently secured high-quality AI infrastructure leases and holding one of the sector's strongest portfolios of power assets, which Morgan Stanley said positions the company to benefit from future data center expansion.
Riot Platforms was also rated Overweight with a $36 price target. Morgan Stanley pointed to Riot's substantial pipeline of powered sites, singling out its Corsicana and Rockdale campuses as likely to attract AI data center tenants. The report noted Riot's existing grid interconnections and infrastructure could enable economically attractive conversions as the company shifts emphasis away from bitcoin mining.
Applied Digital received an Equal-weight rating with a $36.50 price target. While Morgan Stanley acknowledged Applied Digital's sizeable portfolio of contracted AI data center leases, the firm highlighted comparatively lower returns on invested capital and financing risks associated with its development pipeline as constraints on upside potential.
The report emphasized that AI capabilities are evolving at a non-linear pace and that this technical acceleration is driving sustained demand for computing power that exceeds current supply. In Morgan Stanley's view, bitcoin mining operators that already own robust power infrastructure offer one of the quickest and lowest-risk avenues to mitigate electricity constraints confronting hyperscale AI developers.
Market moves referenced in the coverage included intraday changes for the stocks mentioned: RIOT +3.64%, HUT +7.7%, and APLD -0.33%.
This analysis frames a potential industry pivot in which power-rich industrial campuses are repurposed to meet AI computing needs, with implications for data center development, power markets, and owners of specialized industrial real estate.