Core Scientific (CORZ) Poised to Deliver on AI Computing Needs
A recent research report by Bernstein highlights the unique positioning of Core Scientific, a bitcoin miner, in delivering AI data center scale within a one-to-three year timeframe. The company’s partnership with CoreWeave, announced in June, is seen as a strategic move that positions it well for growth in the rapidly expanding AI market.
Legacy Data Centers Face Challenges
While legacy data centers can provide equivalent scale, they are not equipped to do so within the same timeframe. According to Bernstein, these centers face significant challenges in meeting the growing demands of AI companies, which require rapid access to infrastructure and computing power. The report notes that "for CoreWeave, in the AI arms race, execution speed and time to market is most critical."
Core Scientific’s Strengths
Bernstein highlights several strengths that position Core Scientific for success in the AI market:
- Readily available sites and power: Unlike legacy data centers, Core Scientific has access to readily available sites and power, reducing costs and increasing efficiency.
- Less competition: The company operates in a less competitive space within the 1-3 year timeframe data center market.
- Strong data center talent bench: Core Scientific is able to build and hire a strong team of data center professionals, ensuring that its operations are expertly managed.
AI Companies’ Growing Needs
The rapid growth of AI companies has created a significant challenge for the industry. With investor money pouring in, these firms require fast access to infrastructure and computing power to meet their growing needs. However, traditional data centers struggle to keep pace with demand, leaving AI companies facing significant challenges.
Bitcoin Miners’ Unique Advantage
Bitcoin miners, on the other hand, have a unique advantage when it comes to providing computing power for AI applications. With access to readily available sites and power, they are well-positioned to meet the growing demands of AI companies. Core Scientific’s partnership with CoreWeave is seen as a key example of this trend.
Counterparty Risk and Overbuild Concerns
Some investors have raised concerns about the counterparty risk associated with Core Scientific’s deal with CoreWeave, citing the risks of a debt-fueled overbuild. However, Bernstein notes that these are broader risks within the AI cycle and investment in CORZ involves underwriting CoreWeave.
Bernstein’s Outperform Rating
Despite these concerns, Bernstein maintains an outperform rating on Core Scientific’s stock with a $17 price target. The company’s unique positioning and strengths make it well-suited for growth in the AI market.
Private Equity Firms’ Growing Interest
The success of Core Scientific’s partnership with CoreWeave has sparked interest among private equity firms, which are now looking to partner with bitcoin miners to help meet the growing demands of AI companies. This trend is seen as a key driver of growth for the industry.
Core Scientific’s unique positioning and strengths make it well-suited for growth in the rapidly expanding AI market. With its access to readily available sites and power, less competition within the 1-3 year timeframe data center market, and strong data center talent bench, the company is poised to deliver on AI computing needs. While concerns about counterparty risk and overbuild remain, Bernstein’s outperform rating reflects the company’s potential for growth.
- Investors looking to capitalize on the growing demand for AI computing power should consider investing in Core Scientific.
- Private equity firms interested in partnering with bitcoin miners to help meet AI computing needs should take note of Core Scientific’s success with its deal with CoreWeave.