Core Scientific's Strategic Rebound: Buy Rating Upgrade and AI-Driven Infrastructure Potential

The recent surge in investor optimism around Core Scientific (NASDAQ: CORZ) is no accident. After a tumultuous year marked by strategic pivots and a failed merger, the company is now positioned to capitalize on the explosive growth of AI infrastructure. With a string of "buy" ratings from top analysts and a compelling valuation story, Core Scientific's journey from a Bitcoin-centric business to a high-performance computing (HPC) and AI infrastructure leader is gaining critical momentum.

Post-Merger Strategic Clarity: Independence as a Catalyst

The termination of Core Scientific's proposed merger with CoreWeave in late 2025 initially sent shockwaves through the market. However, this independence has proven to be a strategic boon. By retaining autonomy, Core Scientific can now pursue a broader HPC strategy while still benefiting from its existing $10.2 billion hosting deal. This flexibility allows the company to diversify its revenue streams beyond Bitcoin mining, a sector that has become increasingly volatile.

Analysts like Greg Miller of Citizens and H.C. Wainwright have highlighted Core Scientific's robust power pipeline. The company's ability to secure long-term HPC lease agreements-critical for AI workloads-positions it as a low-cost, high-capacity player in a sector where power availability is the new gold standard. This strategic clarity has not gone unnoticed: 12 out of 13 analysts now assign "buy" ratings to CORZ, with price targets averaging $27.65, implying a 93% upside from its current price of $16.89.

Undervaluation in the AI Data Center Sector

Core Scientific's valuation metrics tell a story of mispricing. Despite trading at a P/E ratio of -74.89 and an EV/EBITDA of 22.23, the company is fundamentally a high-growth infrastructure play, not a struggling crypto miner. This disconnect is a classic case of market inertia- investors are still valuing Core Scientific based on its legacy Bitcoin operations rather than its AI-driven future.

The AI data center sector, by contrast, commands premium valuations. Publicly traded peers like Digital Realty (DLR) and Equinix (EQIX) trade at EV/EBITDA multiples of 12x to 15x, while private AI-focused SaaS firms fetch multiples of 16x to 20x. Core Scientific's current valuation is a stark outlier, especially given its 45% year-over-year growth in High-Density Colocation revenue. This segment, which supports AI workloads, is expected to become the company's core growth engine as it scales its power infrastructure and secures more HPC contracts.

AI Infrastructure: A $933 Billion Opportunity

The AI data center market is on a tear. By 2030, it's projected to grow from $236 billion in 2025 to $933 billion, at a 31.6% CAGR. This growth is driven by the insatiable demand for compute power to train large language models and run real-time AI applications. Core Scientific's strategic pivot aligns perfectly with this trend. Its power-optimized infrastructure and experience in large-scale data center operations give it a unique edge in a sector where energy efficiency and scalability are paramount.

Moreover, the company's pending all-stock merger with CoreWeave-though still in flux-could unlock significant synergies. The combined entity would control a massive power footprint and a diversified revenue base, reducing reliance on Bitcoin mining. Analysts project that this merger could stabilize cash flows and drive net profit margins to 23% within three years, a stark contrast to the current -4.8% operating margin.

Risks and Realities

No investment thesis is without risks. Core Scientific's Q3 2025 results revealed a $146.7 million net loss, driven by non-cash fair value adjustments and rising operating expenses. While the HDC segment is growing, it's still a small portion of total revenue ($15 million in Q3 2025 vs. $81.1 million total revenue). The company also faces stiff competition from hyperscalers like Amazon and Microsoft, which are pouring billions into AI-ready data centers.

However, these challenges are short-term headwinds, not existential threats. Core Scientific's low-cost power model and ability to scale quickly in underutilized markets (e.g., Texas, North Carolina) give it a defensible edge. Additionally, the AI sector's rapid growth means even a small market share could translate into outsized returns.

Conclusion: A Buy for the Long-Term

Core Scientific's strategic rebound is a textbook case of undervaluation in a high-growth sector. The recent buy rating upgrades, combined with its AI infrastructure positioning and favorable valuation metrics, make it a compelling long-term investment. While the road ahead is not without risks, the company's pivot to HPC and AI infrastructure aligns with a multi-trillion-dollar market opportunity. For investors willing to look beyond the noise of its crypto past, Core Scientific represents a rare combination of strategic clarity, competitive advantages, and explosive growth potential.