Core Scientific (CORZ): Transitioning from Bitcoin to AI—A Data Center Play with 74% Upside Potential

Core Scientific (NASDAQ: CORZ) is undergoing a strategic metamorphosis, shifting from its legacy Bitcoin mining business to a leading provider of high-performance computing (HPC) infrastructure for AI workloads. Backed by JMP Securities' recent Outperform rating and a 74.40% upside potential, the company is positioned to capitalize on the explosive demand for AI-driven data center capacity. With scalable infrastructure, strategic partnerships, and a streamlined focus on hyperscale computing, Core Scientific is primed to deliver outsized returns for investors.

The Strategic Shift: From Bitcoin to AI

Core Scientific's move from Bitcoin mining to HPC infrastructure is no accident. The company has 1.3 gigawatts (GW) of contracted power capacity, strategically allocating 900 MW to HPC and reserving 400 MW for Bitcoin mining. This pivot aligns with the $80 billion AI infrastructure market, which is expected to grow at a 20% CAGR through 2030. By prioritizing AI workloads—particularly for GPU-powered applications—Core Scientific is targeting a segment where demand far exceeds supply.

The Denton, Texas facility, a cornerstone of this strategy, exemplifies this transition. The site's capacity is being expanded by 70 MW, bringing its total critical IT load to 260 MW. When combined with five other locations, Core Scientific's HPC infrastructure now totals 590 MW, underpinning its partnership with CoreWeave, an AI hyperscaler. This collaboration alone adds $1.2 billion in contracted revenue, with the potential to grow to $10.2 billion over 12 years.

Catalysts for Growth: Partnerships and Scalability

Core Scientific's partnership with CoreWeave is a game-changer. The firm funds nearly all capital expenditures, keeping Core Scientific's balance sheet lean while accelerating growth. By Q1 2025, 8 MW of Denton's capacity was already operational, with plans to deliver 40 MW by quarter-end and 250 MW by year-end. This progress insulates the company from global tariff disruptions and ensures steady revenue streams.

The financial case is equally compelling. JMP Securities' $15 price target (implying a 74.40% upside from current levels) assumes a 12.0x multiple on projected 2027 EBITDA. Even more bullish is the hypothetical long-term scenario where HPC's full 1.6 GW pipeline could push the stock to $48 per share—a valuation that reflects the company's unique ability to monetize its power assets at scale.

Institutional Backing and Buying Signals

Institutional investors are already taking notice. 263.49 million shares are held by funds, a 2.69% quarterly increase, with key players like Hampton Road Capital Management boosting allocations by 48.46%. The put/call ratio of 0.28 further signals bullish sentiment.

Risks and Mitigants

Skeptics may point to near-term challenges:
- Revenue Declines: Q1 2025 revenue dropped 16% sequentially to $79.5 million due to Bitcoin mining contraction.
- Profitability Pressures: LTM EBITDA remains negative at -$14.9 million.

However, these are transitional hurdles. The shift to HPC services—which carry higher margins—will offset Bitcoin's volatility. Core Scientific's $778.6 million in liquidity provides a safety net, while its current ratio of 4.26 ensures short-term stability.

Why Invest Now?

Core Scientific is undervalued relative to its potential. At a current price of $10.80, the stock trades at 16.0x 2026 EBITDA and 8.0x 2027 EBITDA, a significant discount to its long-term value. With $3.2 billion in market cap and a pipeline of 1.6 GW, the company is poised to deliver exponential growth as AI workloads scale.

Conclusion: A Rare Opportunity in AI Infrastructure

Core Scientific's strategic repositioning—bolstered by its power capacity, CoreWeave partnership, and Denton expansion—is a clear winner in the AI arms race. Despite short-term headwinds, the long-term thesis is irrefutable: hyperscale AI compute demand is soaring, and Core Scientific owns the infrastructure to meet it. With JMP's bullish rating and institutional capital flowing in, now is the time to act before the market catches on.

Investment thesis: Buy Core Scientific (CORZ) at current levels. Target price: $15.00. Upside catalysts include HPC capacity delivery, CoreWeave contract expansion, and AI adoption acceleration.

This analysis underscores Core Scientific's transformation into a critical player in the AI infrastructure boom. For investors seeking exposure to this megatrend, CORZ offers an undervalued entry point into one of the most compelling growth stories of the decade.