Cryptocurrencies weren't doing all that well on Monday, but you wouldn't know that from the performance of Cipher Mining (CIFR 2.83%) stock. The Bitcoin (BTC +2.53%) miner and, increasingly, artificial intelligence (AI) infrastructure specialist was the subject of a bullish new analyst note from a well-known investment bank. Encouraged by this, market players traded the stock up by almost 14% across that trading session.
Growing potential
Well before market open that day, a Morgan Stanley team led by pundit Stephen Byrd initiated coverage of three Bitcoin miners -- in addition to Cipher Mining, the report also covered TeraWulf and Mara. Byrd tagged both Cipher Mining and TeraWulf with overweight (read: buy) recommendations, but slapped an underweight (sell) label on Mara.
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According to reports the analysts generally waxed bullish on Bitcoin miners moving into the data center segment, a trend that has been in force for some time. If managed effectively, such facilities provide long-term and very reliable cash flows (which isn't the case with ever-volatile cryptocurrencies).
The Morgan Stanley team believes that the very strong demand for building out artificial intelligence (AI)-capable infrastructure is very likely to exceed the still-limited supply. While companies like Cipher Mining and TeraWulf have small data center operations compared to specialty real estate trusts (REITs), they can still benefit considerably from that demand.
NASDAQ: CIFR
Key Data Points
The facilities of the future
Personally, I'd be far more excited about the potential of the data center business than the crypto mining end of Cipher Mining's operations (I'd say the same for TeraWulf, too). Given that, however, I'd caution that it's still fairly early days for companies like this to be data center specialists, and they've yet to prove that they can be outliers in the segment. All in all, though, there is much potential here, so I'd agree with Morgan Stanley's assessment.
