Core Scientific Is Uniquely Placed to Deliver AI Data Center Scale in the Near Term: Bernstein

• Core Scientific is uniquely positioned to deliver AI data center scale in the one-to-three year timeframe, the report said.
• Bernstein said legacy data centers can provide equivalent scale, but not in the same timeframe.
• The broker has an outperform rating on Core Scientific with a $17 price target.

Core Scientific (CORZ), the bitcoin BTC$94,128.73 miner that in June signed a 200 megawatts (MW) artificial intelligence (AI) deal with CoreWeave, is uniquely positioned to deliver as much as 300 megawatts of scale within three years, broker Bernstein said in a research report on Tuesday following a conversation with CEO Adam Sullivan.

The company benefits from "readily available sites and power, less competition in the 1-3 year timeframe data center market, and ability to build and hire a strong data center talent bench," analysts led by Gautam Chhugani wrote.

Legacy data centers can provide the same scale, but need more time to get there, the report noted. "For CoreWeave, in the AI arms race, execution speed and time to market is most critical," the authors wrote.

AI companies' rapid growth in demand for computer power has left them with a problem. While investor money is pouring in, they don't have fast enough access to the infrastructure needed to power the ever-growing computing needs. Bitcoin miners do, with access to readily available sites and power. Core Scientific's 12-year deal with CoreWeave is evidence of a growing trend of AI firms partnering with bitcoin miners.

The broker noted that some investors have voiced concerns about Core Scientific's counterparty risk with CoreWeave because of the deal, and the risks of a debt-fueled overbuild.

"These are obviously much broader risks in the AI cycle and investment in CORZ involves underwriting CoreWeave," the report said.

Bernstein has an outperform rating on Core Scientific's stock with a $17 price target. The stock was trading little changed at around $10 at publication time.

Private equity firms are seeing value in partnering with bitcoin miners to help with AI computing after Core inked its CoreWeave deal, the company's CEO told CoinDesk in an exclusive interview.

Read more: Core Scientific Upgraded to Buy From Neutral to Reflect HPC Expansion: B Riley