Core Scientific, a publicly traded bitcoin miner, has recently emerged from bankruptcy and seen a surge in its stock price. The company announced plans to increase its computing capacity for high-performance computing (HPC) that supports AI operations, with 300 megawatts of available infrastructure. This will be added to the 200 megawatts committed under a recent deal with AI hyperscaler CoreWeave, potentially generating $3.5 billion in revenue over a 12-year contract with high profit margins. CEO Adam Sullivan believes that the full 500 megawatts could generate over $8 billion in revenue over the same term.
The CoreWeave deal highlights the growing power demands of AI providers, as they require high-performance computing that can be quickly deployed. Core Scientific has 1.2 gigawatts of power, making it well-positioned to meet these demands. CoreWeave initially offered to buy the entire company for $1 billion, but the offer was rejected as undervaluing the company. Analysts believe that Core Scientific is a potential take-out target, given its growing potential in the AI computing space.
Joe Flynn, an analyst at Compass Point, issued a buy rating for Core Scientific’s shares with a price target of $12.50. He sees potential for further upside from additional HPC announcements, with a potential price target of $17.50. The company’s ability to deliver infrastructure in a timely manner is crucial for its success, but so far, its projects are coming online quicker than anticipated. The recovery in cryptocurrency prices allowed Core Scientific to trim $400 million of debt, leading to its successful exit from bankruptcy.
Core Scientific aims to offer a unique digital infrastructure-driven opportunity in the AI compute expansion space. The company seeks to build a balanced business with recurring revenue and exposure to both bitcoin mining and the potential growth of AI operations. With the increasing demand for AI computing, Core Scientific is well-positioned to capitalize on this market opportunity. CEO Adam Sullivan emphasized the importance of building application-specific digital infrastructure and finding scale for the newest generation of GPUs to serve clients with large AI models.
Investors have responded positively to Core Scientific’s growth potential, with the company’s stock surging nearly 10% following the announcement of the new HPC infrastructure. Analysts believe that Core Scientific’s position in the AI computing space, as well as its ability to meet the power demands of AI providers, make it an attractive investment opportunity. The company’s recent success and potential for further growth have positioned it as a key player in the evolving landscape of AI operations and high-performance computing.
