BTIG's $23 Target: A Tactical Play on Core Scientific's Standalone AI Bet

The specific event-driven opportunity for Core Scientific is clear. On Tuesday, BTIG upgraded the stock to Buy with a $23 price target, citing the company's underperformance versus AI peers and its potential to "hit the ground running in 2026." The stock currently trades at $16.73, implying a 38% upside from the upgrade. This sets up a classic catalyst play: a positive analyst call following a major strategic reset.

The catalyst itself is the termination of the CoreWeave merger. The deal was rejected by shareholders in October, forcing Core Scientific to execute its standalone AI colocation strategy. This removes a significant overhang and a period of strategic indecision. The company is now fully on the sidelines no longer, as BTIG noted, and must prove its ability to secure high-performance computing contracts and power capacity independently. The upgrade is a vote of confidence that the company can do just that.

Yet the setup is already partially priced in. The stock has gained 11.21% over the past five days, a move that has pulled it from its 52-week low. This near-term pop suggests the market is reacting to the merger's end and the renewed focus on execution. The immediate risk is that the stock has already captured much of the optimism from the upgrade, leaving limited room for further gains unless the company delivers concrete wins on its standalone plan.

The bottom line is a tactical opportunity. The BTIG upgrade provides a clear, quantified target and frames the narrative around a fresh start. For event-driven investors, the play is to assess whether the company can now hit the ground running as promised. The valuation gap is real, but the stock's recent strength means the catalyst must be followed by strong operational results to justify the move higher.

The Standalone Engine: Power, Contracts, and the Execution Test

Core Scientific's future is now a standalone bet on its AI colocation business, a stark pivot from its past. The company's core growth engine is its partnership with AI hyperscaler CoreWeave, which is committed to 1.3 gigawatts of gross power across its footprint. This translates to a staggering $10.2 billion in potential cumulative revenue over a 12-year contract. The recent expansion at the Denton site, adding 70 MW and $1.2 billion in contracted revenue, is a key milestone in this buildout. Yet this powerful new engine operates against a severe financial reality: the company's legacy business is in freefall. Total revenue fell 15% year-over-year in Q3 2025 and has dropped 40% over the last twelve months. The shift from mining to colocation is clear, but the revenue decline shows the transition is painful and ongoing.

The financial mechanics of this new model are a critical test. Unlike the merger-backed plan that was recently rejected, Core Scientific must now fund its own expansion. The company is responsible for $104 million of capex for the recent Denton site expansion, a significant capital outlay that it must finance independently. This marks a fundamental shift from a model where a partner covered costs to one where Core Scientific bears the upfront investment risk. The company's liquidity, with $694.8 million in cash and bitcoin, provides a buffer, but the path to profitability now requires executing this capital-intensive buildout while its core revenue continues to contract.

The bottom line is a high-stakes execution story. The AI colocation contract is a multi-billion-dollar, long-term anchor that justifies a valuation premium. Analysts note the stock trades at roughly $4 million per megawatt, below the peer average, suggesting the market sees value in the contracted power. However, that value is entirely contingent on Core Scientific successfully converting its data centers, funding the required capex, and ramping up the new revenue stream. The company is "hitting the ground running in 2026" after being sidelined, but the immediate risk is that the financial pressure from its declining legacy business could strain its ability to fund this ambitious, standalone expansion. The contract is the promise; the execution, funded by its own balance sheet, is the test.

Valuation and Risk/Reward: The High-Stakes Trade

The valuation for Core Scientific is a study in extremes. The stock trades at a price-to-sales ratio of 15.6x, a figure that is more than double the typical peer multiple. This premium prices in a near-perfect execution story: the company must secure high-performance computing contracts, deploy its power-rich assets effectively, and navigate a post-merger landscape without its strategic partner. The risk is that this growth is already discounted. As one analysis notes, the market's price-to-sales multiple flags elevated valuation risk if the promised revenue surge stumbles.

Analyst sentiment reflects this high-stakes setup. The consensus price target sits around $19, but individual targets range from a bearish $15 to a bullish $34. This wide dispersion captures the core uncertainty. The termination of the CoreWeave merger removed a major overhang, prompting upgrades from firms like BTIG and Macquarie. Yet, the stock's recent performance tells a mixed story. It has seen a 11.21% gain over the past five days, but remains down over the past month and year-to-date. This choppy action suggests sentiment is improving, but conviction is still forming.

The primary risk is execution. Core Scientific must now prove it can monetize its power pipeline and secure new HPC colocation deals independently. The company's 40.08% revenue decline over the last twelve months highlights the challenge of transitioning from its legacy business. While analysts expect it to "hit the ground running in 2026," the path is untested. The stock's 40.4% undervaluation relative to a $26.82 fair value estimate suggests some analysts see significant upside, but that view hinges entirely on flawless operational delivery.

The bottom line is a classic event-driven trade. The catalyst-the failed merger-has cleared the deck, but the company now faces a steeper climb alone. The high valuation leaves little room for error. For investors, the reward is a potential re-rating if Core Scientific executes its standalone AI/HPC pivot. The risk is a continued valuation compression if it fails to secure contracts and deploy capital effectively. The setup is clear, but the outcome depends on a single, high-stakes variable: execution.