Core Scientific’s strategic shift towards AI hosting, supported by a landmark deal with CoreWeave, has earned it a buy rating from Canaccord. The company’s dual focus on AI hosting and bitcoin mining positions it for growth, with a price target of $16.
Bitcoin miner Core Scientific (CORZ) is on the verge of a significant transformation, positioning itself as a major player in artificial intelligence (AI) hosting, according to a recent report from Canaccord. The brokerage firm has initiated coverage of the company with a buy rating and a price target of $16. This is a promising development for Core Scientific, which is leveraging its existing infrastructure to capitalize on the rapidly growing AI hosting market.
AI Hosting Deal a Game Changer
A critical factor in Canaccord’s positive outlook is a transformative 12-year contract Core Scientific signed in June with hyperscaler CoreWeave. Hyperscalers are data centers capable of delivering massive amounts of computing power, essential for AI and machine learning tasks. This contract is being hailed as a “landmark mega deal” by Canaccord analysts, marking the first of its kind in the bitcoin mining industry. The firm’s pivot to AI hosting is viewed as a strategic move that will diversify its revenue streams beyond bitcoin mining.
Canaccord’s analysts, led by Joseph Vafi, outlined three key drivers for Core Scientific’s stock performance: rising revenue from AI hosting, improved cash flow, and potential for future acquisitions. The $16 price target includes approximately $12 attributed to the CoreWeave contract, $3 from the company’s AI hosting-related power supply, and $1 from its ongoing bitcoin mining operations.
Balancing Bitcoin Mining with AI Expansion
Even as Core Scientific shifts part of its focus to AI, it maintains a strong foothold in the bitcoin mining industry. According to Canaccord, the company has repurposed nearly 500 megawatts (MW) of power for AI hosting but still retains 230 MW for bitcoin mining activities. This remaining capacity offers further growth potential in the mining space while allowing the company to capitalize on the explosive demand for AI hosting.
The company’s strategic dual focus positions it well to benefit from both sectors. As AI becomes increasingly vital to industries worldwide, the demand for high-performance compute (HPC) solutions will grow. Core Scientific’s partnership with CoreWeave enables it to enter this lucrative space without abandoning its established bitcoin mining business, which continues to generate revenue.
Future Prospects
Core Scientific’s ambitious plans to expand its AI hosting operations could see it become a major force in the industry, with analysts at Canaccord expecting significant revenue growth. The AI hosting business is not only a diversification strategy but also a long-term play that aligns with market trends in computing. As the demand for AI infrastructure increases, Core Scientific’s ability to provide the necessary high-performance computing power places it in a unique and advantageous position.
The company’s potential for further site acquisitions and expansion only strengthens the bullish outlook, making Core Scientific a compelling stock for investors looking for exposure to both cryptocurrency and AI hosting sectors.
Disclosure
This article is for informational purposes only and does not constitute financial advice. Always conduct thorough research and consult with a financial advisor before making any investment decisions, especially in rapidly evolving markets like cryptocurrency and AI.
