Why Institutional Investors Are Still Bullish on Core Scientific Amid a 40% Selloff

Institutional investors are doubling down on Core Scientific (CORZ) despite a sharp 40% selloff in late October 2025, signaling confidence in the company's strategic repositioning and long-term infrastructure value. The most notable move came from DSC Meridian Capital LP, which increased its stake in Core Scientific by $25 million in early November 2025, bringing its total holdings to 2.28 million shares valued at $40.91 million-8.3% of the firm's 13F assets under management. This bet, made just weeks before the selloff, underscores a belief that Core Scientific's pivot to high-density colocation (HDC) and its robust liquidity position will drive sustainable value creation, even as short-term volatility persists.

Strategic Reorientation: From Crypto Mining to AI-Driven Infrastructure

Core Scientific's transformation from a digital asset miner to a provider of AI and high-performance computing (HPC) infrastructure has gained momentum in 2025. The company's third-quarter 2025 results highlighted this shift, with HDC revenue rising to $15.0 million-a 45.6% year-over-year increase. Management has set an ambitious target to deliver 250 MW of billable colocation capacity by year-end, positioning Core Scientific to capitalize on the surging demand for AI workloads, which require energy-efficient, high-density data center solutions.

This strategic pivot is not merely aspirational. Core Scientific's power infrastructure, including its 1.2 GW of owned and contracted power, provides a critical differentiator in an industry where access to affordable, reliable energy is a bottleneck for growth. As stated by the company in its Q3 earnings report, "Our ability to scale high-density infrastructure at low marginal costs positions us to serve the next phase of computing demand." For institutional investors like DSC Meridian, this infrastructure moat represents a long-term value driver, even as the company navigates near-term challenges in its legacy mining business.

Liquidity as a Catalyst for Stability and Growth

Core Scientific's financial resilience further justifies the recent institutional optimism. As of Q3 2025, the company held $694.8 million in liquidity, including $453.4 million in cash and $241.4 million in bitcoin holdings. This liquidity buffer not only provides operational flexibility but also serves as a strategic asset to fund expansion in the HDC segment. For example, the company has used its bitcoin reserves to collateralize debt and finance infrastructure upgrades, reducing reliance on external financing and preserving shareholder equity.

The strength of Core Scientific's balance sheet has not gone unnoticed. DSC Meridian's $25 million stake increase, disclosed in an SEC filing on November 14, 2025, was timed to capitalize on the stock's post-earnings discount, reflecting a belief that the market is underappreciating the company's liquidity advantages. One analyst noted in a recent report, "The combination of cash, bitcoin, and low-cost power gives Core Scientific a unique ability to execute on its long-term vision."

Analyst Sentiment Turns Positive Amid Operational Stabilization

While Core Scientific's digital asset mining revenue declined in Q3 2025 due to a 55% drop in bitcoin mined, the company's gross profit turned positive for the first time in over a year, signaling operational stabilization. This improvement has spurred a reevaluation by analysts, with firms like Macquarie, Clear Street, and Cantor Fitzgerald raising price targets or issuing bullish ratings in recent months.

The improving sentiment is also tied to the uncertain fate of Core Scientific's proposed $9 billion merger with CoreWeave. While management has framed the deal as a way to accelerate colocation growth, large shareholders and analysts have criticized the terms as undervaluing Core Scientific's infrastructure assets. The lack of clarity around the merger-pending shareholder approval on October 30, 2025-has created a window for investors to bet on the company's standalone potential.

Conclusion: A Long-Term Infrastructure Play

The recent selloff in Core Scientific's stock has presented a buying opportunity for institutions willing to look beyond short-term volatility. DSC Meridian's $25 million stake increase, coupled with the company's pivot to HDC, liquidity strength, and improving analyst sentiment, highlights a consensus that Core Scientific is well-positioned to become a key player in the AI-driven computing infrastructure sector. As demand for high-density data center capacity accelerates, Core Scientific's power infrastructure and operational discipline could serve as a durable foundation for long-term value creation.