In a surprising turn of events, leading investment research firm Bernstein has doubled down on its bullish outlook for bitcoin miner Core Scientific (CORZ), even as the company’s shares tumbled 30% earlier this week amidst skepticism over the viability of miners venturing into the realm of artificial intelligence (AI).
The dramatic slide in Core Scientific’s stock price was triggered by comments from Chinese AI startup DeepSeek, which questioned the notion that bitcoin miners could successfully pivot to become valuable players in the AI data center space. However, Bernstein analysts, led by Gautam Chhugani, remain undeterred in their conviction that Core Scientific is uniquely positioned to capitalize on the convergence of cryptocurrency mining and AI computing.
A Leader Among AI-Focused Miners
In their latest research report, Bernstein analysts assert that Core Scientific stands out as the “leader of the pack” among bitcoin miners with ambitions to expand into the AI sector. The company boasts an impressive 1.3 gigawatts (GW) of available power supply and has secured a significant 12-year AI deal with CoreWeave, positioning it at the forefront of this emerging trend.
Core Scientific’s proactive approach to building out its AI capabilities is evident in its aggressive expansion plans. The company is on track to deliver its first cluster of AI-focused data centers in the first half of 2025, demonstrating its commitment to establishing a strong foothold in this rapidly evolving space. Furthermore, Core Scientific continues to acquire and develop new power sites, ensuring a robust infrastructure to support its ambitious AI endeavors.
A Finite Window of Opportunity
Bernstein’s analysts highlight the urgency for bitcoin miners to seize the AI opportunity, noting that they have a limited timeframe of 12-18 months to establish a viable hybrid data center business. This window coincides with consistent capital expenditure from hyperscale cloud providers, creating a favorable environment for miners to diversify their operations and tap into the growing demand for AI computing resources.
“Bitcoin miners have a 12-18 month finite window to build a hybrid data center business, while the hyperscaler capex remains consistent.”
– Bernstein Analysts
A Deep Value Opportunity?
Despite the recent sell-off, Bernstein maintains an optimistic outlook on Core Scientific’s prospects. The firm argues that the current market valuation of Core Scientific’s shares more closely resembles that of a pure-play bitcoin mining company, rather than reflecting the value of its burgeoning AI data center business. This apparent dislocation presents a compelling opportunity for investors, as roughly 70% of Core Scientific’s capacity is now allocated to AI computing.
Bernstein has reiterated its “outperform” rating on Core Scientific’s stock, along with a price target of $17 per share, implying significant upside potential from current levels. As of early trading on January 30, 2025, Core Scientific’s shares have rebounded 3.8% to $11.90, indicating that some investors are beginning to recognize the potential value in the company’s AI-driven growth story.
Navigating the AI Pivot
The journey for bitcoin miners venturing into the world of AI is not without its challenges and skeptics. The recent market reaction to DeepSeek’s comments underscores the uncertainty surrounding this strategic shift. However, Core Scientific’s substantial power capacity, long-term partnerships, and aggressive expansion plans position it as a frontrunner in this emerging trend.
- 1.3 GW of available power supply
- 12-year AI deal with CoreWeave
- On track to deliver first AI data center cluster in H1 2025
- Continues to acquire and develop new power sites
As the convergence of bitcoin mining and AI computing gains momentum, investors will be closely watching the progress of companies like Core Scientific. While the road ahead may be fraught with challenges and skepticism, the potential rewards for successful execution could be substantial. Bernstein’s unwavering support for Core Scientific amid the recent market turbulence serves as a testament to the firm’s conviction in the long-term value proposition of this emerging hybrid business model.
The Bottom Line
Core Scientific’s resilience in the face of market skepticism and its aggressive pursuit of AI opportunities have caught the attention of leading research firms like Bernstein. As the company continues to allocate a growing portion of its capacity to AI computing, investors may begin to recognize the potential for substantial value creation. While the path forward is not without risks, Core Scientific’s early mover advantage and strong partnerships position it as a compelling play for those seeking exposure to the convergence of bitcoin mining and artificial intelligence.
As the AI revolution unfolds, bitcoin miners that successfully navigate this pivot could emerge as key players in the data center landscape. Core Scientific’s journey will undoubtedly serve as a closely watched case study for the industry, with Bernstein’s unwavering support adding an extra layer of intrigue to this unfolding narrative.
