Morgan Stanley Says TeraWulf's Selloff Misprices Its Contracted AI Capacity

TeraWulf shares have fallen sharply in October, but Morgan Stanley argues the decline is inconsistent with the value of the company's contracted AI infrastructure. The bank reiterated an Overweight rating and a $65 target, according to reports of its October 15 note.

That target implied several hundred percent upside from the stock price at the time. Such a gap is not a measure of certainty. It reflects assumptions about future tenant leases, financing and the value of powered data-center capacity that may take years to convert into cash flow.

TeraWulf has tangible assets behind the thesis. Its second-quarter update showed 102 megawatts energized and generating lease revenue as of July, with 438 megawatts of contracted capacity targeted for energization by the first half of 2027. The company also expanded contracted electric service at its Muskie campus to 1 gigawatt.

Capacity is not the same as revenue. Muskie still requires construction, financing and tenants, and the relevant power agreement carries long-term obligations. Morgan Stanley highlighted potential Muskie leases, a credit backstop for Hawesville and European growth as catalysts, but each remains subject to execution.

The more useful investor framework is to track signed megawatts, tenant credit quality, capital committed per megawatt and the gap between scheduled and actual energization. Morgan Stanley's rating is a positive signal, but the share-price collapse also shows how quickly higher borrowing costs can overwhelm long-dated infrastructure value.