Valiant's Call Options on Core Scientific Signal High-Conviction Bet Amid AI Push and Burn Rate Risks

The headline here is a clear vote of confidence. San Francisco-based Valiant Capital Management built a massive position in Core Scientific during the third quarter, buying 1.68 million additional shares. By the end of September, that stake was worth $116.31 million and represented the fund's largest holding, outranking its broad market ETFs and industrial bets. This wasn't a small bet; it was a concentrated commitment.

But the smart money isn't just about the size of the bet. It's about the timing and the tools. Valiant didn't buy this position after a crash. The fund added to its stake while the stock was rallying, building skin in the game as optimism around the company's infrastructure shift grew. This was an endorsement of the strategy before the headline risk reentered the picture.

The bullish signal gets even more leveraged. Alongside the 6.48 million shares, Valiant reported holding call options tied to about 4.21 million shares. This is a classic smart-money move-a way to amplify potential upside while limiting downside risk. It shows the fund is not just buying the stock but also betting on a continued climb, using options to get more bang for its buck.

The bottom line is that Valiant's move was a calculated, concentrated bet made at a high point in the cycle. It reflects a belief in Core Scientific's power and compute platform thesis, not a panic buy. For investors, the question is whether this institutional accumulation is a sign of foresight or a trap built on momentum that has since faded.

The Financial Reality: Growth vs. Losses

The numbers tell a stark story of a company in painful transition. Core Scientific's headline revenue for the fourth quarter was $79.8 million, a sharp decline of 16% from the prior quarter and 38% from a year ago. This isn't a minor stumble; it's a collapse driven by the core of its old business. The company's bitcoin mining revenue fell to $42.2 million in Q4, down from $79.9 million a year earlier, as it mined 57% less bitcoin. The pivot to colocation is real, but it's not yet a substitute.

On the surface, the shift is working. Colocation revenue, which includes AI hosting services, climbed to $31.3 million from $8.5 million over the quarter. That's a powerful growth line, and management is betting heavily on it, aiming for a 1.5 gigawatt pipeline of leasable capacity. Yet this growth is dwarfed by the losses elsewhere. The company's gross profit was only $3.9 million in the third quarter, and its net loss reached $146.7 million for that period. The margin pressure is severe and systemic.

The bottom line is a mismatch between headline growth and underlying profitability. The AI colocation business is scaling, but it's not yet profitable enough to offset the massive losses from the shrinking mining operations and the high costs of the transition. The company is burning cash to build its future, and the smart money is betting that the new model will eventually work. But for now, the financial reality is one of contraction and heavy losses.

Catalysts and Risks: What to Watch

The bullish thesis now faces its first major test. Core Scientific is scheduled to release its fourth quarter and fiscal year 2025 financial results after the market closes on March 2, 2026. This report will be the first comprehensive look at the company's financials since the strategic pivot accelerated, making it a critical catalyst for the stock.

The primary growth driver to watch is execution on the CoreWeave contract. Management has stated it is on track to deliver ~590 MW by early 2027, with ~350 MW already energized. The near-term metric is the pace of billable capacity delivery. The company had previously guided to deliver 250MW of billable capacity to CoreWeave by the end of 2025, and hitting that target would demonstrate operational capability and validate the revenue pipeline. Any delay here would be a direct hit to the growth narrative.

The flip side of that coin is the persistent financial risk. The company's net loss reached $146.7 million for the third quarter, and while the Q4 report may show some improvement, the path to profitability remains long. The real test is liquidity. After a strong cash position of $778.6 million in cash and cash equivalents at the end of Q1 2025, the company has been burning cash to fund the build-out. Investors must monitor the burn rate and ensure the capital raised is sufficient to reach the 1.5 gigawatt pipeline target without further dilution.

The bottom line is that the March 2nd earnings call will be a litmus test. Strong progress on the CoreWeave build-out and a clearer path to cash flow positivity could confirm the smart money's bet. Any stumble on execution or a widening of losses would expose the vulnerability of a growth story built on heavy, ongoing investment. For now, the thesis hangs on these near-term metrics.