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.
InvestingPro Insights
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.
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