What's Happening?
Roth Capital Partners has upgraded Core Scientific's stock from neutral to buy, following the diminishing likelihood of a deal with CoreWeave. Analyst Darren Aftahi increased the 12-month price target
for Core Scientific to $23.50, suggesting a potential 32% gain. Core Scientific, a major player in digital infrastructure, operates data centers across six U.S. states with a total contracted power capacity of approximately 1.3GW. The upgrade comes after CoreWeave decided not to increase its acquisition offer for Core Scientific, describing the deal as 'nice to have, not a need to have.' Consequently, Core Scientific is expected to continue as a standalone entity, focusing on leasing its power pipeline primarily for high-performance computing (HPC) applications.
Why It's Important?
The upgrade of Core Scientific's stock reflects a shift in market perception, emphasizing the company's potential as an independent entity. This development is significant for investors and stakeholders in the digital infrastructure and high-performance computing sectors. By focusing on leasing its power capacity, Core Scientific could capitalize on the growing demand for HPC services, including AI workloads and bitcoin mining. The decision by CoreWeave not to pursue the acquisition further underscores the competitive dynamics in the digital infrastructure market, where companies are evaluating strategic partnerships and standalone growth opportunities.
What's Next?
Core Scientific is likely to continue expanding its leasing operations, targeting other tenants for its uncontracted power capacity. This strategy could attract new clients seeking HPC solutions, potentially boosting the company's revenue and market position. Investors will be watching for further announcements regarding Core Scientific's leasing agreements and any strategic partnerships that may arise. Additionally, the company's performance in the stock market will be closely monitored, especially in light of the recent upgrade and increased price target.
