Last Update 12 Aug 26
Fair value Increased 3.53%CORZ: Long Dated AI Power Leases With AMD Will Shape Future Returns
Core Scientific's analyst fair value estimate has been revised higher from $35.86 to $37.13 as analysts factor in a series of higher price targets, larger contracted AI and high performance compute capacity, and improved long term margin assumptions tied to recent AMD and CoreWeave agreements.
Analyst Commentary
Recent research on Core Scientific points to a wide range of views on how the AMD and CoreWeave contracts, power capacity, and execution risk could affect the stock's valuation and long term growth profile. Analysts are revisiting models as the company leans further into high performance compute and long duration leases with large counterparties.
Bullish Takeaways
- Bullish analysts see the AMD and CoreWeave agreements as key drivers for higher fair value, with references to roughly 1.1 GW of contracted billable capacity and more than 1 GW of leased high performance compute capacity supporting revenue visibility over multi year periods.
- Several price target increases into the US$30 to US$42 range are tied to views that Core Scientific's contracted power and grid connected expansion capacity provide meaningful support for current valuations and potential upside if additional leases are signed.
- Some analysts highlight the 15 year, US$14b high performance compute colocation agreement and the 590 megawatt and 530 megawatt arrangements as a foundation for long term growth, with reserved capacity of about 1.9 GW seen as optionality for future contracts.
- Bullish analysts also point to benefits from reduced client concentration as Core Scientific secures multiple hyperscale customers, which they argue improves the risk profile of cash flows tied to its AI infrastructure business.
Bearish Takeaways
- Bearish analysts focus on execution risk, especially around the timing and completion of new leases, and highlight concerns that the stock price already reflects much of the capacity that can realistically be leased over the near to medium term.
- One research view cuts the rating and trims the price target to US$25, citing elevated execution risk relative to investor expectations for the second half of 2026 and moderating confidence in the pace of new deal signings.
- Some cautious commentary argues that a good portion of the expected business inflection around 2027 and 2028 is already reflected in the share price after strong gains over the prior year, which could limit further re rating without fresh contract wins.
- Bearish analysts also flag the recent pullback in high performance compute stocks tied to AI spending concerns and macro pressures as a reminder that sector sentiment can shift quickly, which may affect how investors value Core Scientific's growth plans.
What’s in the News for Core Scientific
- Core Scientific and AMD agreed to a 15 year AI infrastructure partnership that includes up to 2.5 GW of data center capacity across multiple U.S. sites, with more than 500 MW expected to support AMD ecosystem deployments beginning in 2027. Source: company and AMD client announcement.
- The AMD agreement covers about 529 MW of leased capacity at five IT locations in Texas, Oklahoma, Alabama, and Georgia, with options for AMD to reserve an additional 1.9 GW of capacity through 2028. Source: Core Scientific AMD infrastructure deal coverage.
- The 15 year AMD contract carries more than US$14b in base contracted revenue and supports Core Scientific’s shift away from bitcoin mining toward AI infrastructure and high performance computing services. Source: Core Scientific AMD infrastructure deal coverage.
- Analyst commentary tied to the AMD partnership includes price target changes, such as Needham moving its fair value view from US$29 to US$35 as it updates revenue and EBITDA forecasts around the long duration commitments. Source: Core Scientific AMD infrastructure deal coverage.
- Citadel disclosed a 6.5% stake in Core Scientific, or about 20.9 million shares, after acquiring most of hedge fund Situational Awareness’s public stock holdings, which involved more than 11.5 million shares sold through block trades. Source: Citadel stake disclosure reporting.
Valuation Changes for Core Scientific
- Fair Value has risen slightly from $35.86 to $37.13 per share.
- The Discount Rate has moved marginally higher from 10.35% to 10.36%.
- The Revenue Growth assumption has been trimmed from 75.40% to 72.10%.
- The Profit Margin forecast has been raised from 17.74% to 22.33%.
- The future P/E multiple has been reduced from 42.74x to 37.24x.
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Key Takeaways
- Reallocating resources from Bitcoin mining to HPC infrastructure could drive future growth amid rising data center demands and diversified clientele.
- Debt restructuring and 0% interest funding improve growth potential and operational efficiencies through strategic hires, enhancing financial stability and earnings.
- Dependency on CoreWeave, shift in strategy, restructuring uncertainties, and execution delays pose risks to growth and profitability.
Catalysts
About Core Scientific- Provides digital asset mining services in the United States.
- Core Scientific secured a major HPC contract with CoreWeave, with a total revenue potential of $8.7 billion over a 12-year term, significantly boosting future revenue compared to their current levels.
- The company is expanding HPC infrastructure capacity by reallocating resources from Bitcoin mining, adding new sites, and extending existing ones, expecting to drive future revenue growth as data center needs rise.
- Core Scientific’s ability to diversify its customer base and reduce reliance on CoreWeave as a primary client could improve margins and provide more stable revenue streams in the long term.
- The improved balance sheet following significant debt restructuring and raising $625 million through a convertible note offering at 0% interest rates positions the company to effectively fund future growth initiatives with lower interest costs, improving net margins.
- Strategic hires of data center professionals enhance execution capabilities, likely leading to increased operational efficiencies, positively impacting earnings as the company grows its data center business.
Core Scientific Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming Core Scientific's revenue will grow by 72.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from -370.8% today to 22.3% in 3 years time.
- Analysts expect earnings to reach $501.1 million (and earnings per share of $0.95) by about August 2029, up from -$1.6 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.2 billion in earnings, and the most bearish expecting $-1.1 billion.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 37.3x on those 2029 earnings, up from -4.1x today. This future PE is greater than the current PE for the US Software industry at 31.8x.
- Analysts expect the number of shares outstanding to grow by 5.22% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 10.36%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- The shift from Bitcoin mining to HPC hosting and the resulting decline in digital asset hosted mining revenue, which was down significantly from $30 million to $6.5 million, could adversely impact overall revenue if the new strategy doesn't ramp up as expected.
- The company faced a net loss of $265 million in the fourth quarter of 2024, an increase from the previous year's loss, raising concerns about its ability to reach profitability and improve net margins in the near term.
- The dependency on a singular client, CoreWeave, for a significant portion of projected revenue introduces concentration risk. If CoreWeave's demand or business model shifts unfavorably, it could dramatically decrease Core Scientific's forecasted earnings.
- With the recent Chapter 11 debt restructuring, there remains uncertainty about the company’s long-term financial health and its reliance on future capital expenditures, which could put strain on cash flow and negate earnings improvements.
- The delayed rollout of planned HPC capacity expansions due to permitting and equipment issues could slow revenue growth and heighten execution risk, potentially impacting future earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of $37.12 for Core Scientific based on their expectations of its future earnings growth, profit margins and other risk factors.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $55.0, and the most bearish reporting a price target of just $28.0.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $2.2 billion, earnings will come to $501.1 million, and it would be trading on a PE ratio of 37.3x, assuming you use a discount rate of 10.4%.
- Given the current share price of $20.87, the analyst price target of $37.12 is 43.8% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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