Jefferies Sees Big Potential in Bitcoin Miner Core Scientific for AI
In a significant development, leading financial services firm Jefferies has initiated coverage of Bitcoin miner Core Scientific Inc. (CORZ) with a ‘Buy’ rating. This optimistic outlook is driven by the firm’s belief that Core Scientific is well-positioned to leverage the rapidly expanding demand for artificial intelligence (AI).
Jefferies analysts, citing data from Coindesk, are bullish on Core Scientific’s prospects due to its robust power supply and its highly experienced data center development team. These factors, they believe, will be instrumental in meeting the escalating demands of the AI sector. As a result of this positive assessment, Jefferies has assigned a $19 price target to CORZ stock.
Analysts Jonathan Petersen and Jan Aygul highlighted the significance of Core Scientific’s 12-year contract with Nvidia-backed cloud provider CoreWeave. This agreement provides infrastructure for AI use cases and, according to Jefferies, could serve as a catalyst for securing more such deals in the future.
They also emphasized that Core Scientific’s Bitcoin mining operations continue to be profitable and are demonstrating increasing efficiency. This dual focus, they believe, positions the company favorably in the evolving technological landscape.
Core Scientific’s Transformation and AI Focus
Core Scientific’s trajectory in 2024 has been marked by significant milestones. The company emerged from Chapter 11 bankruptcy in January, and its shares were relisted on Wall Street. Since then, the stock has witnessed a remarkable 312% surge, largely driven by the recovery in Bitcoin’s price and the company’s strategic shift towards a high-performance computing model.
This strategic pivot, catering to the data center demands of AI applications, has been a key factor in Core Scientific’s growth. In a recent interview with Benzinga, CEO Adam Sullivan emphasized the predictability, long-term stability, and profitability of the AI business, contrasting it with the volatility associated with Bitcoin mining.
Market Reaction and Future Outlook
Shares of Core Scientific surged 6.21% to $14.20 during Monday’s regular trading session, according to data from Benzinga Pro. This positive sentiment extended to the broader Bitcoin mining sector, with the Valkyrie Bitcoin Miners ETF WGMI experiencing a surge of over 10%.
Jefferies’ ‘Buy’ rating and optimistic outlook suggest that the firm believes Core Scientific has the potential to become a major player in the burgeoning AI market. The company’s strategic shift, combined with its expertise in data center infrastructure and power supply, positions it well to capitalize on the increasing demand for AI-driven services.
The future for Core Scientific appears bright, as the demand for AI continues to grow at an unprecedented pace. The company’s focus on this emerging technology and its commitment to innovation are expected to drive further growth and success in the years to come.
