• Core Scientific recently secured a long-term high-performance computing contract with CoreWeave worth up to US$8.70 billion over 12 years, while reallocating capacity away from Bitcoin mining toward AI-focused data centers.
• Management has also raised its long-term cash gross margin target on the CoreWeave contract to around 80%–85%, highlighting how existing infrastructure and secured power access may support more profitable use of its data center footprint.
• We’ll now examine how this CoreWeave contract and the pivot toward AI and hyperscale data centers reshape Core Scientific’s investment narrative.

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Core Scientific Investment Narrative Recap

To own Core Scientific, you need to believe its pivot from Bitcoin mining to AI and hyperscale data centers can eventually outweigh legacy losses and balance sheet scars from restructuring. The CoreWeave contract remains the key near term catalyst, while customer concentration is still the biggest risk. The recent margin uplift guidance on this contract supports the bull case, but does not by itself reduce the dependence on a single major client.

The most relevant recent update here is management’s raised long term cash gross margin target of about 80% to 85% on the CoreWeave deal, based on early operating data. This reinforces the idea that repurposing existing power secured sites toward AI hosting could be more profitable than past Bitcoin mining, while also sharpening the trade off between higher margin potential and the revenue risk of relying so heavily on one hyperscale tenant.

Yet while the contract headline looks attractive, investors should also be aware that...

Core Scientific's narrative projects $2.2 billion revenue and $516.2 million earnings by 2029. This requires 84.4% yearly revenue growth and about a $1.6 billion earnings increase from -$1.1 billion today.

Uncover how Core Scientific's forecasts yield a $32.05 fair value, a 19% upside to its current price.

Exploring Other Perspectives

Some of the most pessimistic analysts were assuming only about US$1.3 billion of revenue and roughly US$33.7 million of earnings by 2028, so if you are worried about heavy reliance on CoreWeave and capital hungry expansion, it is worth comparing that cautious view with how this new contract might shift expectations.

Explore 3 other fair value estimates on Core Scientific - why the stock might be worth as much as 34% more than the current price!

Form Your Own Verdict

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Core Scientific research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
• Our free Core Scientific research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Core Scientific's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.