Core Scientific's Strategic Pivot to AI Data Centers Attracts Bullish Analyst Coverage

After 300% Stock Rally, Jefferies Says This Bitcoin Miner Has More Room To Run Up On AI Demand - Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI), Core Scientific (NASDAQ:CORZ)

In a recent development, leading financial services firm Jefferies has commenced coverage of Bitcoin miner Core Scientific Inc. CORZ with a 'Buy' rating, underscoring its potential to leverage the burgeoning demand for artificial intelligence (AI). What Happened: Jefferies analysts were optimistic about Core Scientific's prospects, citing its robust power supply and data center development team as key factors in its ability to meet the escalating AI demand, Coindesk reported Monday. Consequently, the bank has initiated coverage of the stock with a buy rating and a $19 price target. Jefferies analysts Jonathan Petersen and Jan Aygul highlighted the company's 12-year contract with Nvidia-backed cloud provider CoreWeave to provide infrastructure for AI use cases and said that a successful execution would pave the way for more such deals in the future. They also pointed out that the firm's bitcoin mining operations continue to be profitable and are becoming increasingly efficient. See Also: The American Dream Is Alive ... In El Salvador, And It's Safer Than Disneyland, Says Bitcoin Bull Max Keiser A "buy" rating on a stock means that the analyst believes the stock is undervalued and has the potential to increase in price. Why It Matters: Core Scientific's journey in 2024 has been marked by significant milestones. The company emerged from Chapter 11 bankruptcy in January earlier this year and saw its shares relist on Wall Street. Since then, the stock has surged 312%, largely driven by a recovery in Bitcoin's price and the company's shift to a high-performance computing model, servicing data center demand for AI applications. In a recent interview with Benzinga, CEO Adam Sullivan said that in contrast to the volatile Bitcoin mining business, the AI business offers a "predictable, long-term, and profitable" revenue stream. Price Action: Shares of Core Scientific popped 6.21% to $14.20 during Monday's regular trading session, according to data from Benzinga Pro. The broader Bitcoin mining sector also saw gains, with the Valkyrie Bitcoin Miners ETF WGMI surging over 10%. Read Next: Chamath Palihapitiya Says Gen-Z Has 'Decoupled' Financial Freedom From Traditional 9-5 Jobs, Betting Instead On Bitcoin Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

Jefferies bullish on Core Scientific stock after impressive post-bankruptcy pivot By Investing.com

On Monday, Jefferies, a global investment banking firm, initiated coverage on Core Scientific Inc. (NASDAQ:CORZ), a company specializing in blockchain infrastructure and data center operations. The firm has given the stock a "Buy" rating and set a price target of $19.00. The new rating is based on Core Scientific's significant transformation over the past year. The company has shifted its focus from primarily Bitcoin mining to building artificial intelligence-focused data centers. This strategic pivot has been recognized as an effective utilization of the company's extensive access to power resources. According to Jefferies, Core Scientific's success in this transition can be attributed to both fortuitous circumstances and the company's skilled data center (DC) development team. The team's experience and preparedness for such a strategic shift were highlighted as key factors contributing to the company's current position. The analyst from Jefferies remarked on the company's journey, acknowledging the challenges of emerging from bankruptcy and the subsequent success in repurposing its resources. The statement from the analyst reads: "CORZ's journey over the past year represents an impressive post-bankruptcy comeback story as the company leverages its significant access to power -- previously earmarked for Bitcoin mining -- to build AI-focused data centers." The firm believes that while luck played a part in Core Scientific's successful transition, the company's accomplishments should be credited to its experienced development team. The team's capability to adapt and pivot towards AI data center construction has been a cornerstone of Core Scientific's strategy and recovery. The initiation of coverage by Jefferies with a positive outlook reflects confidence in Core Scientific's future business prospects. The price target of $19.00 suggests a potential upside from the company's current market valuation. In other recent news, Core Scientific has seen several significant developments. The company's stock have been given a Buy rating by Canaccord Genuity and B.Riley, with Canaccord raising its price target to $17.00 from the previous $16.00. Core Scientific has also secured an additional 118MW of data center power for AI hosting from CoreWeave, bringing the total power under contract to 500MW. This expanded contract is expected to generate an approximate 80% contribution-like margin for Core Scientific. The company has also announced a substantial expansion of its high-performance computing (HPC) hosting capabilities. CoreWeave has chosen to contract an additional 120 megawatts of critical IT load at one of Core Scientific's locations, contributing approximately $2.0 billion to Core Scientific's projected cumulative revenue over a 12-year period. This brings the total potential revenue from CoreWeave's contracts to $8.7 billion. Core Scientific has reported mining 345 bitcoins in September, adding to a total of 5,621 bitcoins mined year-to-date. The company also sold 370 bitcoins in September, generating sales proceeds of approximately $22.2 million. Denise Sterling, Core Scientific's CFO, is set to step down by May 2025, and a search for her successor has been initiated. These are the recent developments at Core Scientific. Core Scientific's strategic pivot and recent performance are reflected in several key metrics from InvestingPro. The company has shown a remarkable 288.66% price total return over the past year, aligning with Jefferies' positive outlook. This strong performance is further emphasized by Core Scientific trading near its 52-week high, with its current price at 95.06% of that peak. Despite these impressive returns, InvestingPro data reveals that Core Scientific is not yet profitable over the last twelve months, with a negative P/E ratio of -4.31. However, an InvestingPro Tip suggests that analysts predict the company will become profitable this year, potentially supporting Jefferies' bullish stance. The company's revenue growth of 8.25% over the last twelve months and a more robust 11.18% growth in the most recent quarter indicate positive momentum in Core Scientific's new business direction. Additionally, the company's EBITDA has shown substantial growth of 517.26%, which could be attributed to its successful transition into AI-focused data centers. For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Core Scientific, providing deeper insights into the company's financial health and market position.

Core Scientific shares up after Jefferies initiates coverage with 'buy' By Investing.com

Investing.com -- Shares of Core Scientific (NASDAQ:CORZ) rose on Monday during pre-market trading, following Jefferies' initiation of coverage with a "buy" rating. The brokerage underscored Core Scientific's evolving strategy from its origins as a Bitcoin miner toward building high-performance computing data centers focused on artificial intelligence demands. Jefferies analysts flagged the company's recent pivot as a post-bankruptcy comeback story, praising Core Scientific's capacity to leverage access to major power infrastructure -- previously used for Bitcoin mining -- for new AI-focused data centers. The analysts said that Core Scientific is uniquely positioned to seize opportunities in the booming AI market, thanks to its experienced data center development team, which includes veterans from firms like Equinix (NASDAQ:EQIX) and HP (NYSE:HPQ). The analysts at Jefferies emphasized the favorable economics of Core Scientific's lease with CoreWeave, a GPU-focused cloud service provider. As part of the agreement, CoreWeave funds construction, reducing the need for immediate capital from Core Scientific, which will repay through a capex credit system tied to revenue. This partnership reflects the growing industry need for large-scale, reliable power sources to support AI operations. Jefferies issued a $19 price target for Core Scientific, suggesting a 42% upside from its current trading level of $13.37. The brokerage expects Core Scientific's revenue to increasingly shift from Bitcoin mining to AI hosting services, projecting that AI-related revenue will account for 59% by 2027 and 80% by 2029. This shift aligns with broader trends as large technology companies continue expanding their AI capacities and data infrastructure investments. While Core Scientific plans to maintain its Bitcoin mining operations -- capitalizing on operational efficiency upgrades -- it is clear that the company sees its future in hosting high-performance compute workloads. The mining segment, although profitable, will eventually stabilize without substantial further expansion. Jefferies identified risks, including challenges in executing HPC projects and the potential volatility of Bitcoin prices, which remain relevant to Core Scientific's business. However, with AI infrastructure demand surging, the analysts expressed confidence that Core Scientific will secure more leasing deals with major tech firms by year-end. Successful execution of these agreements is expected to validate Core Scientific's pivot to high-performance compute hosting. Jefferies' buy rating comes at a time when Core Scientific is attempting to rebuild investor confidence after emerging from Chapter 11 bankruptcy earlier this year. With its repositioning efforts gaining traction and strong demand for AI computing infrastructure, analysts see the stock's future as promising and well-timed to capitalize on market shifts toward AI and data center growth.

Core Scientific shares target raised by Canaccord on data center power By Investing.com

On Wednesday, Canaccord Genuity adjusted its price target on shares of Core Scientific Inc. (NASDAQ: CORZ) shares, increasing it to $17.00 from the previous $16.00 while maintaining a Buy rating. The firm acknowledged the recent development where CoreWeave exercised its option to procure an additional 118MW of data center power for AI hosting. This decision by CoreWeave brings the total power under contract with Core Scientific to 500MW for critical load data center operations, with an additional 200MW for supportive functions. Core Scientific anticipates generating an approximate 80% contribution-like margin from this expanded contract. Furthermore, CoreWeave will be responsible for funding the approximately $180 million in capital expenditures required to upgrade the existing infrastructure to support the power-dense AI hosting services. The analyst pointed out that beyond this current expansion, there is potential for Core Scientific to significantly increase its power portfolio at existing sites. The company's strategic acquisition of brownfield assets, such as old textile mills, presents opportunities for increased power allocation from utilities. Core Scientific is reportedly making efforts to expand power allocations at these sites, which has not yet been specified for the transition to AI hosting from the current Bitcoin mining operations. The potential for a material boost in power allocation at sites that could be repurposed for AI hosting is seen as a likely positive development for Core Scientific's stock. The company's proactive approach to expanding its infrastructure and capabilities is a key factor in the revised price target. In other recent news, Core Scientific, a leading provider of digital infrastructure for bitcoin mining and high-performance computing, has announced a substantial expansion of its high-performance computing (HPC) hosting capabilities. CoreWeave, an AI Hyperscaler, has chosen to contract an additional 120 megawatts of critical IT load at one of Core Scientific's locations. This new agreement is expected to contribute approximately $2.0 billion to Core Scientific's projected cumulative revenue over a 12-year period, bringing the total potential revenue from CoreWeave's contracts to $8.7 billion. In addition, Core Scientific has seen several changes in its operations and financial strategies. The company recently sold 375 bitcoins, generating approximately $22.5 million in sales proceeds. Core Scientific also repaid $267 million in high-interest debt, a move facilitated by the proceeds from its recent convertible senior notes offering. Core Scientific's CFO, Denise Sterling, is set to step down by May 2025, and a search for her successor has been initiated. In terms of analyst ratings, B.Riley has raised the stock price target for Core Scientific to $14.00 from $13.00, maintaining a Buy rating on the stock. Canaccord Genuity initiated a Buy rating for Core Scientific, based on the company's recent deal with CoreWeave for high-performance computing hosting. These are the latest developments at Core Scientific. Core Scientific's recent developments align with several key metrics and insights from InvestingPro. The company's market cap stands at $3.54 billion, reflecting its significant presence in the data center and AI hosting space. InvestingPro data shows a strong revenue growth of 8.25% over the last twelve months, with quarterly revenue growth of 11.18% in Q2 2024, indicating the company's expanding operations. The expanded contract with CoreWeave and the potential for increased power allocation at existing sites are likely contributors to Core Scientific's impressive stock performance. InvestingPro Tips highlight that CORZ has shown a strong return over the last three months, with a 25.64% price total return. Moreover, the stock is trading near its 52-week high, with the current price at 97.93% of its 52-week peak. While the company's growth trajectory is evident, investors should note that Core Scientific is not currently profitable, as pointed out by an InvestingPro Tip. However, analysts predict the company will become profitable this year, which could further support the stock's upward momentum. For those interested in a deeper analysis, InvestingPro offers 13 additional tips for CORZ, providing a comprehensive view of the company's financial health and market position.

Core Scientific's SWOT analysis: AI pivot fuels stock's potential amid challenges By Investing.com

Core Scientific, Inc. (NASDAQ:CORZ), a company traditionally focused on Bitcoin mining, has been making significant strides in repositioning itself within the rapidly evolving landscape of artificial intelligence (AI) and high-performance computing (HPC) data centers. This strategic pivot has caught the attention of investors and analysts alike, prompting a closer examination of the company's prospects and challenges in this new arena. Core Scientific has long been recognized as a leading vertically integrated Bitcoin miner in North America, offering both self-mining operations and hosting services. However, the company's recent moves signal a dramatic shift in its business model. The most notable development is Core Scientific's transformative deal with CoreWeave, a private entity, which has effectively repositioned the company within the AI/HPC data center space. This strategic partnership involves Core Scientific procuring an additional 118MW of data center power, bringing its total capacity to 500MW for operations and an extra 200MW for support functions. The contract extension is expected to maintain high contribution margins of approximately 80% and involves capital expenditure reimbursement of around $180 million, funded by CoreWeave. Core Scientific's pivot towards AI and HPC hosting is timely, given the increasing scarcity of power across the U.S. grid and the rising demand for energy-intensive AI applications. The company's existing infrastructure and access to power have become increasingly valuable assets, potentially offering a significant competitive advantage in the race to establish AI/HPC data centers. The shift from Bitcoin mining to AI/HPC data centers is not just a change in focus but potentially a transformative move for Core Scientific's business model. Analysts suggest this transition could lead to a significant re-rating of the company's multiples due to more predictable revenue streams associated with AI/HPC hosting compared to the volatility of cryptocurrency mining. Financial projections for Core Scientific reflect the company's transitional phase. For the fiscal year 2024, analysts estimate sales of approximately $492.2 million, with a slight increase to $522.9 million projected for 2025. EBITDA projections show some fluctuation, with estimates of $144.5 million for 2024 and $145.0 million for 2025. The company's enterprise value to EBITDA (EV/EBITDA) ratios are projected to be around 41.4x for 2024 and 41.2x for 2025, indicating high growth expectations from the market. These multiples suggest investors are pricing in significant potential from Core Scientific's strategic shift towards AI and HPC hosting. The AI revolution is driving unprecedented demand for data center capacity and computing power. Core Scientific's move into this space is aligned with broader industry trends, particularly the increasing need for specialized infrastructure to support AI workloads. The scarcity of power across the U.S. grid is another critical factor working in Core Scientific's favor. As large AI players compete for energy resources, the company's existing power infrastructure and ability to expand capacity become increasingly valuable assets. Moreover, the global shortage of graphics processing units (GPUs), crucial components for AI and HPC applications, underscores the importance of companies that can provide ready-to-use infrastructure for AI workloads. Core Scientific's ability to deliver energized data center capacity built to NVIDIA (NASDAQ:NVDA) standard architecture positions it favorably in this competitive landscape. Infrastructure delays could significantly hinder Core Scientific's growth trajectory. The company's transition to AI/HPC hosting relies heavily on timely delivery of energized data center capacity. Any setbacks in constructing or upgrading facilities to meet the specific requirements of AI workloads could result in missed revenue opportunities and potential loss of market share to competitors who can deliver capacity more quickly. Furthermore, delays could strain relationships with key partners like CoreWeave, potentially leading to contract renegotiations or cancellations. This could have a cascading effect on Core Scientific's financial projections and investor confidence, especially given the high expectations built into the company's current valuation multiples. The transition from Bitcoin mining to AI/HPC hosting presents several risks for Core Scientific. First, there's the operational risk of adapting existing infrastructure and processes to meet the different requirements of AI and HPC workloads. This transition requires not only physical changes to data centers but also the development of new expertise and potentially the hiring of specialized personnel. Second, the company faces market risks as it enters a new, highly competitive sector. While Core Scientific has a first-mover advantage in leveraging its power infrastructure for AI hosting, established data center operators and tech giants are also vying for market share in this space. The company will need to differentiate its offerings and maintain technological relevance to compete effectively. Lastly, there's financial risk associated with this pivot. The capital expenditure required for transitioning and expanding facilities for AI/HPC hosting is substantial. If the anticipated demand for these services doesn't materialize as quickly as expected, or if pricing pressures in the market intensify, Core Scientific could face challenges in achieving its projected returns on investment. Core Scientific's first-mover advantage in repurposing its Bitcoin mining infrastructure for AI/HPC hosting could yield significant benefits. By being among the first to market with substantial power capacity and data center infrastructure ready for AI workloads, the company is well-positioned to capture early partnerships and long-term contracts with AI companies and researchers. This early entry allows Core Scientific to establish itself as a key player in the AI infrastructure space before competition intensifies. The company can leverage its experience and reputation from the Bitcoin mining sector to build trust with new clients in the AI industry. Additionally, being early in the market provides opportunities to shape industry standards and practices, potentially creating lasting competitive advantages. The first-mover status also gives Core Scientific a head start in optimizing its operations for AI workloads, potentially leading to cost efficiencies and superior service quality compared to later entrants. This could result in higher margins and customer retention rates, contributing to more stable and predictable revenue streams over time. Core Scientific's potential for expanding its power portfolio is substantial and could be a key driver of future growth. The company's existing relationships with power providers and its track record in managing large-scale energy-intensive operations position it favorably for securing additional power capacity. The increasing demand for power from AI and HPC applications creates opportunities for Core Scientific to negotiate new power contracts or expand existing ones. The company's demonstrated ability to efficiently utilize power for Bitcoin mining can be leveraged to attract power providers looking for stable, large-scale customers. Moreover, Core Scientific's expertise in identifying and developing sites suitable for high-energy operations could allow it to expand into new geographic areas with favorable power conditions. This expansion could not only increase the company's hosting capacity but also diversify its power sources, reducing risks associated with regional power issues or regulatory changes. The potential for power portfolio expansion also opens doors for additional partnerships similar to the CoreWeave deal. As more companies seek reliable and scalable AI infrastructure, Core Scientific's growing power capacity could make it an attractive partner for long-term, high-value hosting contracts. Core Scientific's strategic pivot towards AI and HPC hosting has garnered positive attention from analysts, reflected in the upward revisions of price targets. The company's ability to leverage its existing infrastructure and secure key partnerships has bolstered confidence in its growth potential. However, the wide range in price targets underscores the uncertainty and potential volatility in the rapidly evolving AI infrastructure market. This analysis is based on information available up to October 24, 2024, and reflects the company's position and analyst perspectives as of that date. Gain an edge in your investment decisions with InvestingPro's in-depth analysis and exclusive insights on CORZ. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore CORZ's full potential at InvestingPro. Should you invest in CORZ right now? Consider this first: Investing.com's ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if CORZ is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level. To evaluate CORZ further, use InvestingPro's Fair Value tool for a comprehensive valuation based on various factors. You can also see if CORZ appears on our undervalued or overvalued stock lists. These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.