Core Scientific transitions to AI data centers with strategic partnership
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 23 2024
0mins
Source: PRnewswire
Core Scientific Inc. saw its stock rise 4.25% as it reached a 52-week high.
The company is transitioning from Bitcoin mining to High-Performance Computing (HPC) hosting, with a significant 268% increase in colocation revenue to $31.3 million. Additionally, Core Scientific secured multi-billion dollar hosting contracts with AI cloud provider CoreWeave, enhancing its market position and capital efficiency. This strategic shift positions the company well for future growth in the AI data center super-cycle.
The implications of this transformation suggest a strong potential for Core Scientific as it adapts to market demands, attracting institutional investors who see long-term value in its infrastructure.
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Analyst Views on CORZ
Wall Street analysts forecast CORZ stock price to rise
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 27.010
Low
19.94
Averages
27.46
High
40.00
Current: 27.010
Low
19.94
Averages
27.46
High
40.00
About CORZ
Core Scientific, Inc. is engaged in designing, building, and operating large-scale, purpose-built data centers for high-density colocation (HDC) services and digital asset mining for both its own account and to a lesser extent, third-party customers. The Company operates facilities for HDC services and is a provider of digital infrastructure, software solutions, and services to its third-party customers. The Company operates through three segments, which include Colocation, Digital Asset Self-Mining, and Digital Asset Hosted Mining. The Colocation segment provides space, power, cooling, facilities operations, security, and other services to third-party customers to support workloads for machine learning and artificial intelligence. The Digital Asset Self-Mining segment consists of performing digital asset mining for its own account. The Digital Asset Hosted Mining segment provides hosting services to third parties for digital asset mining.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Investment Thesis on Core Scientific, Inc. (CORZ)
- Strong Financial Performance: Core Scientific, Inc. achieved a billing capacity of 243MW in Q1 2026, generating over $350 million in annualized colocation revenue, reinforcing its leadership in AI infrastructure development, even as market focus remains on the timing of a second hyperscaler contract.
- Margin Target Increase: Management raised the long-term cash gross margin target for the CoreWeave contract to 80%-85%, reflecting improved visibility from actual operating experience and implying significantly higher future profitability, which boosts investor confidence.
- Robust Market Demand: Despite the disappointment of a previously exclusive 500MW hyperscaler negotiation, the underlying demand remains strong with three additional hyperscalers actively engaged at the same sites, indicating the company's potential to convert this demand into new contracts, especially supported by its differentiated platform and active construction pipeline.
- Transformation to AI Colocation Provider: As Bitcoin mining operations are phased out, Core Scientific is transforming into a pure-play AI colocation provider, with expectations that full delivery of the 590MW CoreWeave contract could yield approximately $850 million in annualized colocation revenue, significantly enhancing overall margins.
See More
Bernstein Raises Price Targets for Core Scientific and Riot Platforms Amid AI Growth
- Core Scientific Price Target Raised: Bernstein increased the price target for Core Scientific (CORZ) from $24 to $32, reflecting the potential value of the company's transition from cryptocurrency mining to AI infrastructure, which is expected to enhance its market competitiveness.
- Riot Platforms' First AI Revenue: Riot Platforms (RIOT) saw its price target raised from $25 to $30 due to reporting $33.2 million in AI hosting revenue for the first time, marking the company as a revenue-generating data center operator, which is anticipated to drive future revenue growth.
- MARA Price Target Cut: Bernstein lowered Mara Holdings' (MARA) price target from $23 to $17, primarily due to an 18% year-over-year decline in first-quarter revenue to $174.6 million, resulting in a $1.3 billion net loss, highlighting challenges in its transition process.
- Market Sentiment Shift: In pre-market trading, CORZ and RIOT stocks rose by 0.06% and 0.6%, respectively, while MARA's stock fell by 0.7%, indicating increased investor confidence in AI transitions but a cautious outlook on MARA's future.
See More
Solstice and Core Scientific See Active Options Trading
- Solstice Options Volume: Solstice Advanced Materials Inc (Ticker: SOLS) saw options trading volume of 18,645 contracts today, representing approximately 1.9 million shares, which is about 79.3% of its average daily trading volume of 2.4 million shares over the past month, indicating heightened market interest in its future performance.
- High Volume Contracts: The $65 strike put option for SOLS was particularly active, with 15,892 contracts traded today, equating to approximately 1.6 million shares, reflecting investor expectations regarding potential downside risks for the stock.
- Core Scientific Options Activity: Concurrently, Core Scientific Inc (Ticker: CORZ) recorded options trading volume of 113,081 contracts, representing about 11.3 million shares, which accounts for 68.8% of its average daily trading volume of 16.4 million shares over the past month, showcasing strong market interest in its stock.
- Key Contract Insights: Among CORZ options, the $40 strike call option saw a trading volume of 25,119 contracts, approximately 2.5 million shares, indicating investor confidence in the stock's potential upside, which may influence its short-term price movements.
See More
Aschenbrenner's Major Investment in Nebius Sparks Wall Street Attention
- Portfolio Highlight: Aschenbrenner's hedge fund, Situational Awareness, holds 12.4 million Class A shares of Nebius, representing a 5.6% stake, making it the fund's largest equity investment, reflecting strong confidence in the cloud computing sector.
- Fund Size and Background: As of the end of March, Situational Awareness reported approximately $4 billion in investments, and despite Aschenbrenner's lack of professional money management experience, the fund has garnered support from several prominent tech and investment figures, indicating its potential in the AI space.
- Diverse Investment Strategy: The fund invests not only in publicly traded companies expected to benefit from AI adoption but also backs startups like Anthropic, while also taking smaller short positions against industries that may be disrupted by AI, showcasing its adaptive market response capabilities.
- Market Risk Management: Situational Awareness disclosed sizable put-option positions linked to Nvidia, Broadcom, and others, indicating a proactive approach to hedge against overheated market risks while pursuing returns, ensuring the stability of its investment portfolio.
See More
Core Scientific Transitions to AI Data Centers Amidst Market Volatility
- Business Transformation: Core Scientific, Inc. is shifting from pure Bitcoin mining to High-Performance Computing (HPC) hosting, with self-mining revenue declining while colocation revenue surged 268% to $31.3 million, indicating the company's potential in the AI data center super-cycle.
- Strategic Partnership: The firm has secured multi-billion dollar hosting contracts with AI cloud provider CoreWeave, which enhances capital expenditure efficiency and allows Core to expand state-of-the-art AI data centers without dilutive equity raises, strengthening its market position.
- Power Expansion Plans: Core Scientific announced plans to expand its Pecos, Texas campus to 1.5 gigawatts of gross power, with high-voltage power permits and grid connections currently having 5-to-7-year lead times, laying the groundwork for future growth despite the long lead times.
- Market Valuation: Despite facing market volatility, institutional investors believe that the replacement cost of Core Scientific's infrastructure is significantly higher than its current market valuation, suggesting that its stock holds long-term investment appeal.
See More
Core Scientific Q1 2026 Earnings Call Insights
- Significant Revenue Growth: Core Scientific reported 243 megawatts of billable capacity in Q1 2026, translating to over $350 million in annualized GAAP revenue, indicating strong performance in the high-density colocation market and potential for increased market share.
- Successful Capital Financing: The company closed a $3.3 billion project bond financing with approximately $2.9 billion in net proceeds, which will be allocated for future growth projects, showcasing its strong appeal and capability in capital markets.
- Clear Expansion Plans: Core Scientific expects to deploy around $2 billion in capital expenditures in 2026 to advance approximately 1 gigawatt of new billable capacity, reflecting confidence in future growth and strategic positioning.
- Business Model Transformation: As Bitcoin mining activities gradually wind down, the company is actively shifting focus to high-density colocation, with plans to deliver additional data center capacity by 2027, enhancing its competitive edge in the market.
See More
Investment Thesis on Core Scientific, Inc. (CORZ)
- Strong Financial Performance: Core Scientific, Inc. achieved a billing capacity of 243MW in Q1 2026, generating over $350 million in annualized colocation revenue, reinforcing its leadership in AI infrastructure development, even as market focus remains on the timing of a second hyperscaler contract.
- Margin Target Increase: Management raised the long-term cash gross margin target for the CoreWeave contract to 80%-85%, reflecting improved visibility from actual operating experience and implying significantly higher future profitability, which boosts investor confidence.
- Robust Market Demand: Despite the disappointment of a previously exclusive 500MW hyperscaler negotiation, the underlying demand remains strong with three additional hyperscalers actively engaged at the same sites, indicating the company's potential to convert this demand into new contracts, especially supported by its differentiated platform and active construction pipeline.
- Transformation to AI Colocation Provider: As Bitcoin mining operations are phased out, Core Scientific is transforming into a pure-play AI colocation provider, with expectations that full delivery of the 590MW CoreWeave contract could yield approximately $850 million in annualized colocation revenue, significantly enhancing overall margins.
See More
Bernstein Raises Price Targets for Core Scientific and Riot Platforms Amid AI Growth
- Core Scientific Price Target Raised: Bernstein increased the price target for Core Scientific (CORZ) from $24 to $32, reflecting the potential value of the company's transition from cryptocurrency mining to AI infrastructure, which is expected to enhance its market competitiveness.
- Riot Platforms' First AI Revenue: Riot Platforms (RIOT) saw its price target raised from $25 to $30 due to reporting $33.2 million in AI hosting revenue for the first time, marking the company as a revenue-generating data center operator, which is anticipated to drive future revenue growth.
- MARA Price Target Cut: Bernstein lowered Mara Holdings' (MARA) price target from $23 to $17, primarily due to an 18% year-over-year decline in first-quarter revenue to $174.6 million, resulting in a $1.3 billion net loss, highlighting challenges in its transition process.
- Market Sentiment Shift: In pre-market trading, CORZ and RIOT stocks rose by 0.06% and 0.6%, respectively, while MARA's stock fell by 0.7%, indicating increased investor confidence in AI transitions but a cautious outlook on MARA's future.
See More
Solstice and Core Scientific See Active Options Trading
- Solstice Options Volume: Solstice Advanced Materials Inc (Ticker: SOLS) saw options trading volume of 18,645 contracts today, representing approximately 1.9 million shares, which is about 79.3% of its average daily trading volume of 2.4 million shares over the past month, indicating heightened market interest in its future performance.
- High Volume Contracts: The $65 strike put option for SOLS was particularly active, with 15,892 contracts traded today, equating to approximately 1.6 million shares, reflecting investor expectations regarding potential downside risks for the stock.
- Core Scientific Options Activity: Concurrently, Core Scientific Inc (Ticker: CORZ) recorded options trading volume of 113,081 contracts, representing about 11.3 million shares, which accounts for 68.8% of its average daily trading volume of 16.4 million shares over the past month, showcasing strong market interest in its stock.
- Key Contract Insights: Among CORZ options, the $40 strike call option saw a trading volume of 25,119 contracts, approximately 2.5 million shares, indicating investor confidence in the stock's potential upside, which may influence its short-term price movements.
See More
Aschenbrenner's Major Investment in Nebius Sparks Wall Street Attention
- Portfolio Highlight: Aschenbrenner's hedge fund, Situational Awareness, holds 12.4 million Class A shares of Nebius, representing a 5.6% stake, making it the fund's largest equity investment, reflecting strong confidence in the cloud computing sector.
- Fund Size and Background: As of the end of March, Situational Awareness reported approximately $4 billion in investments, and despite Aschenbrenner's lack of professional money management experience, the fund has garnered support from several prominent tech and investment figures, indicating its potential in the AI space.
- Diverse Investment Strategy: The fund invests not only in publicly traded companies expected to benefit from AI adoption but also backs startups like Anthropic, while also taking smaller short positions against industries that may be disrupted by AI, showcasing its adaptive market response capabilities.
- Market Risk Management: Situational Awareness disclosed sizable put-option positions linked to Nvidia, Broadcom, and others, indicating a proactive approach to hedge against overheated market risks while pursuing returns, ensuring the stability of its investment portfolio.
See More
Core Scientific Transitions to AI Data Centers Amidst Market Volatility
- Business Transformation: Core Scientific, Inc. is shifting from pure Bitcoin mining to High-Performance Computing (HPC) hosting, with self-mining revenue declining while colocation revenue surged 268% to $31.3 million, indicating the company's potential in the AI data center super-cycle.
- Strategic Partnership: The firm has secured multi-billion dollar hosting contracts with AI cloud provider CoreWeave, which enhances capital expenditure efficiency and allows Core to expand state-of-the-art AI data centers without dilutive equity raises, strengthening its market position.
- Power Expansion Plans: Core Scientific announced plans to expand its Pecos, Texas campus to 1.5 gigawatts of gross power, with high-voltage power permits and grid connections currently having 5-to-7-year lead times, laying the groundwork for future growth despite the long lead times.
- Market Valuation: Despite facing market volatility, institutional investors believe that the replacement cost of Core Scientific's infrastructure is significantly higher than its current market valuation, suggesting that its stock holds long-term investment appeal.
See More
Core Scientific Q1 2026 Earnings Call Insights
- Significant Revenue Growth: Core Scientific reported 243 megawatts of billable capacity in Q1 2026, translating to over $350 million in annualized GAAP revenue, indicating strong performance in the high-density colocation market and potential for increased market share.
- Successful Capital Financing: The company closed a $3.3 billion project bond financing with approximately $2.9 billion in net proceeds, which will be allocated for future growth projects, showcasing its strong appeal and capability in capital markets.
- Clear Expansion Plans: Core Scientific expects to deploy around $2 billion in capital expenditures in 2026 to advance approximately 1 gigawatt of new billable capacity, reflecting confidence in future growth and strategic positioning.
- Business Model Transformation: As Bitcoin mining activities gradually wind down, the company is actively shifting focus to high-density colocation, with plans to deliver additional data center capacity by 2027, enhancing its competitive edge in the market.
See More
