Shares of Core Scientific (CORZ), a player in the digital infrastructure market focusing on Bitcoin mining and high-performance computing, have posted an impressive run, climbing over 327.4% over the past year. The company recently announced the extension of a substantial contract with CoreWeave, which is set to expand the company’s hosting capacity to 500 MW by 2026. This latest collaboration is projected to generate $2.0 billion in revenue over the next twelve years, boosting contracts with CoreWeave to a staggering $8.7 billion in total projected revenue.
In addition, Core Scientific has successfully upgraded two of its Bitcoin mining data centers for high-performance computing (HPC) applications. The company beat top-line expectations for the most recent quarter, and its strategic moves have sparked a positive outlook among analysts. It is an intriguing option for investors looking to participate in the growing digital mining and data infrastructure market.
Core Scientific Growing its Capabilities
Core Scientific engages in digital asset mining services, including blockchain infrastructure, software solutions, and the operation of data center mining facilities. Apart from mining digital assets for itself, the company also hosts services for other large Bitcoin miners, encompassing deployment, monitoring, optimization, troubleshooting, and maintenance of customers’ digital asset mining equipment. Additional services include providing electrical power, repair, and other infrastructure services to support operations and sales of mining equipment to customers.
The company has announced that CoreWeave, an AI Hyperscaler, has exercised its last option to contract additional infrastructure under the terms of a 200MW hosting contract for high-performance computing. Core Scientific will enhance infrastructure at one of its sites to deliver approximately 120MW of critical IT load to host CoreWeave’s NVIDIA Graphics Processing Units (GPUs). The modifications will begin in the second half of 2025 and are expected to be operational by the second half of 2026. This new 12-year hosting contract is projected to add approximately $2.0 billion to the previously announced $6.7 billion in projected cumulative revenue associated with CoreWeave contracts, totaling $8.7 billion.
Furthermore, Core Scientific has been making consistent progress on its customer-funded project to modify data centers, aiming to deliver nearly 400MW of digital infrastructure for high-performance computing (HPC). The company is on track to finalize the 100MW expansion of its Bitcoin mining data center in Pecos, TX. In addition, the company plans to construct a state-of-the-art, 100MW data center.
Finally, the company has announced the pricing of $400 million in convertible senior notes due 2029. The net proceeds from the offering will be used to repay existing loans, redeem outstanding senior secured notes, and perform other corporate purposes.
Analysis of Core Scientific’s Recent Financial Results
The company recently reported financial results for Q2 2024. Revenue of $141.10 million beat expectations of $124.25 million. The company witnessed a decrease in Bitcoin mining due to the halving event and increased network difficulty. Despite this decrease, the company saw a 28% increase in its self-mining hash rate and a 134% increase in the price of Bitcoin.
However, net loss for Q2 2024 stood at $804.9 million, a significant increase compared to the Q2 2023 net loss of $9.3 million. This was primarily due to a net $796.0 million mark-to-market adjustment on Core Scientific’s warrants and other contingent value rights. Nevertheless, the company reported a Non-GAAP Adjusted EBITDA of $46.0 million for Q2 2024, $1.0 million higher than the same period in the prior year, and the company’s earnings per share (EPS) was -$0.05, falling below analyst estimates of $0.03.
What Is the Price Target for CORZ Stock?
The stock has been on an upward trend since the company’s reorganization and relisting in January. It trades at the high end of its 52-week price range of $2.61 – $13.60 and shows positive price momentum as it trades above the 20-day (12.39) and 50-day (11.42) moving averages. With a P/S ratio of 7.32x, it appears to be trading at a discount to peers in the Software Infrastructure industry with an average P/S ratio of 9.5x.
Analysts following the company have been bullish on the stock. For instance, B. Riley analyst Lucas Pipes recently reiterated a Buy rating and increased the price target on the shares from $13 to $14, noting optimism about the company’s opportunities. Macquarie and Canaccord have initiated coverage on Core Scientific with an Outperform and Buy rating, each setting a $16 price target.
Core Scientific is rated a Strong Buy overall, based on eight analysts’ recent recommendations. The average price target for CORZ stock is $16.38, which represents a potential upside of 19.39% from current levels.
Core Scientific in Summary
Core Scientific has made significant gains throughout the year. The company’s contract extension with CoreWeave will enable it to boost its hosting capacity and significantly increase revenue. Moreover, ongoing enhancements to its data centers and infrastructure suggest additional growth opportunities on the horizon. With a bullish market outlook and promising investment opportunities in the evolving digital mining and data infrastructure market, CORZ presents a compelling option for investors.
