BorgWarner jumps as Morgan Stanley upgrades stock on AI power potential

Investing.com -- BorgWarner Inc (NYSE: BWA) shares surged nearly 5% in Tuesday trading after Morgan Stanley raised its rating on the automotive supplier, citing a growing opportunity to capitalize on the artificial intelligence infrastructure boom through off-grid power generation. The Wall Street firm upgraded the stock to Overweight from Equalweight and boosted its price target to $95 from $71, signaling increased confidence in the company's ability to expand beyond its core transportation market.

The upgrade centers on BorgWarner’s turbine generator technology, branded as TurboCell, which Morgan Stanley analysts view as a key beneficiary of the widening power shortfall facing data center operators. With the global AI power deficit projected to reach 77 gigawatts through 2029, tech companies are increasingly seeking behind-the-meter generation solutions to bring computing capacity online without waiting for traditional utility grid interconnections.

According to Morgan Stanley's proprietary ranking framework, which evaluates generation costs alongside idle compute opportunity costs, emissions, and tech maturity, BorgWarner’s solution ranks second only to Bloom Energy’s fuel cells. Analysts expect TurboCell commercial deliveries to begin in 2027, projecting annual deployments could approach 3 gigawatts by 2030, representing roughly 3% of the addressable distributed-power market.

While BorgWarner maintains a durable earnings base in its traditional auto parts business, Morgan Stanley notes that microgrid inverters and energy storage systems offer additional avenues for non-automotive growth. The investment firm estimates that distributed-power operations could generate approximately $1.2 billion in EBITDA by 2030, accounting for roughly 35% of the group's total earnings.

The bullish research note reinforces broader market expectation that industrial and automotive manufacturers with specialized thermal and power management expertise stand to gain from data center electrification demands.

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