Here Are Morgan Stanley's Top AI-Sector Bullish Plays This Earnings Season

Morgan Stanley has highlighted Western Digital, TeraWulf, and Williams Companies as standout beneficiaries of accelerating artificial intelligence infrastructure demand.

• With only 41% of reporting S&P 500 companies seeing gains post-earnings, high market expectations are making it harder for firms to impress investors this season. 
• Analysts at Morgan Stanley project earnings for key holdings like Western Digital, TeraWulf, and Williams to significantly beat Wall Street consensus estimates due to structural AI tailwinds. 
• Expanding power generation, high-performance computing data center leases, and surging demand for hard disk drives are serving as near-term growth catalysts.

As the third-quarter corporate earnings season gathers momentum, Wall Street investors are tiptoeing around rising operational costs and spending uncertainty surrounding artificial intelligence stocks, as per Morgan Stanley.

According to research from Morgan Stanley, meeting investor expectations has proven challenging during the initial leg of the reporting period. Among the roughly 10% of S&P 500 constituents that have released results so far, barely 41% experienced positive stock price reactions the following trading day.

Morgan Stanley analyst Michelle Weaver noted that the two weeks leading into reporting season historically mark a seasonal low before metrics rebound. Weaver highlighted that Wall Street estimates project corporate earnings growth of 33% in 2026 and 16% in 2027, with sales growth pegged at 11% and 8%, respectively.

In light of these dynamics, Morgan Stanley identified 14 equities with imminent catalysts capable of driving major stock movements, CNBC reported. Twelve of the highlighted companies feature positive catalysts, whereas two carry downside exposure. Among the firm's top bullish conviction selections are Western Digital (WDC), TeraWulf (WULF), and Williams Companies (WMB).

Western Digital Boosted By Storage Demand

Data storage manufacturer Western Digital stands out as a prime long pick heading into its quarterly report. Morgan Stanley analyst Erik Woodring projects that robust appetite for hard disk drives paired with firmer pricing will push the company's financial performance past consensus projections.

Woodring’s earnings forecast for the December quarter runs approximately 10% above general Wall Street expectations, with fiscal 2027 and 2028 estimates outpacing broader consensus by 15% to 40%. The investment bank maintains an Overweight rating on Western Digital, assigning a price target of $676 against its share price of $332.00.

TeraWulf To Capitalize On Data Center Energy Crunch

AI-infrastructure operator TeraWulf is slated to report its results on Nov. 6. Morgan Stanley analyst Stephen Byrd emphasized that TeraWulf is uniquely positioned to gain from the escalating energy demands of modern data centers.

According to Byrd, public markets are currently discounting TeraWulf's high-performance computing leases, which Byrd estimates hold nearly double the per-share value currently priced into the stock. Morgan Stanley holds an ‘Overweight’ rating on TeraWulf with a $65 price target.

Williams Companies Role In AI Power Consumption

Energy infrastructure provider Williams Companies Inc. is another top selection due to its role in AI-driven power consumption. Set to report earnings on Nov. 2, the firm is expected to capture significant upside from newly commissioned power initiatives.

Analyst Robert Kad forecasts Williams will deliver roughly 16% annualized earnings before interest, depreciation and amortization (EBITDA) growth through 2030, outpacing the company's own guidance of more than 11%. 

Morgan Stanley rates Williams as ‘Overweight’ with a price target of $103.

WDC, WULF Stock: Retail View 

Retail sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes on WULF stock, while was ‘bearish’ on WDC. 

WDC stock gained about 113% year-to-date, while WULF is up 11%. 

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