Core Scientific, Inc. Overview - Core Scientific, Inc. (NASDAQ:CORZ) is gaining attention as an AI stock on Wall Street, with an upgrade from Roth analyst Darren Aftahi from "Neutral" to "Buy" and a price target increase from $17 to $23.50 [1] - The upgrade is based on the assumption that there will be no deal with CoreWeave, as there is increasing activity against the deal and CoreWeave has stated its bid is "best/final" [1] Business Transition and Strategy - Core Scientific is shifting to a standalone business model, focusing on leasing its power pipeline primarily for high-performance computing (HPC) [1] - The company is raising its stock rating to "Buy" based on a mix of discounted net present value (NPV) from its lease with CoreWeave, approximately 700MW of uncontracted power, and its remaining Bitcoin (BTC) power [1] Market Position and Future Outlook - The transition into an AI business is supported by leveraging advanced infrastructure and expertise in HPC [1] - While Core Scientific shows potential as an investment, there are other AI stocks that may offer greater upside potential and less downside risk [2]

Core Scientific Upgrade - Investment bank H.C. Wainwright upgraded Core Scientific (CORZ) to buy with a new price target of $25, driven by increasing demand for AI-ready data center infrastructure [1] - Core Scientific's expertise in developing large-scale facilities for both cryptocurrency and artificial intelligence provides a competitive advantage in the high-performance computing (HPC) market [1] Financial Projections - The $25 price target is based on a projected revenue of $424 million for fiscal 2026, implying a market-cap-to-sales multiple of nearly 19x, which is considered justified due to strong growth potential through 2027 [2] - Core Scientific's scale and rising HPC revenue are seen as mitigating factors against typical crypto-related risks such as hashrate volatility and regulatory exposure [2] Strategic Focus - The upgrade follows a recommendation from proxy advisers ISS and Glass Lewis for shareholders to vote against CoreWeave's proposed acquisition, which H.C. Wainwright believes effectively ends the deal [2] - This situation allows Core Scientific to concentrate on expanding its own HPC infrastructure, positioning it well to benefit from significant technology advancements in the AI era [3]

Core Viewpoint - Core Scientific is transitioning from Bitcoin mining to artificial intelligence and next-generation compute workloads after emerging from Chapter 11 bankruptcy in early 2024 [1] Company Overview - Core Scientific, founded in 2017 and located in Austin, Texas, specializes in high-density colocation and digital asset mining services [2] Stock Performance - The stock has gained 3% in the last five days and 15% over the past month, with a 133% increase over the last six months and a year-to-date return of 38%, significantly outperforming the Russell 2000 Index, which is up only 13% [3] - Over the past 52 weeks, Core Scientific shares have risen approximately 41%, while the Russell 2000 advanced just 13.5% [3] Financial Results - For Q3 2025, Core Scientific reported revenue of $81.1 million, below analyst expectations of $107.2 million, and a 15% decline year-over-year [5] - The company posted a net loss of $146.7 million, an improvement from a $455.3 million loss in the same quarter last year [5] - Earnings per share were ($0.46), beating the consensus estimate of ($0.85), but wider than the ($0.13) per share from the previous year [5] Revenue Breakdown - Digital asset self-mining revenue decreased to $57.4 million due to a 55% reduction in Bitcoin mined, offset by an 88% rise in average Bitcoin price [6] - High-density colocation revenue grew to $15 million, indicating a strategic focus on AI infrastructure [6] - Hosting revenue continued to decline as part of the strategic transition [6] Profitability Metrics - Gross profit rebounded to $3.9 million from a loss of $0.2 million in the previous year [7] - Adjusted EBITDA turned negative at ($2.4) million [7] - The company closed the quarter with total liquidity of $694.8 million, consisting of $453.4 million in cash and $241.4 million in Bitcoin holdings [7]

Group 1 - Core Scientific Inc. is viewed positively by Wall Street analysts, with Cantor Fitzgerald raising its price target to $26 from $18 while maintaining an Overweight rating [1][2] - The potential acquisition by CoreWeave Inc. is a focal point, with two scenarios anticipated if the deal is rejected: either CoreWeave renegotiates or Core Scientific pursues its own high-performance computing (HPC) strategy [1][2] - B. Riley has also upgraded Core Scientific to Buy from Neutral, increasing its price target to $30 from $17, indicating a strong likelihood of shareholders voting against the acquisition [2] Group 2 - Core Scientific operates in the digital asset mining sector in the US, divided into three segments: Digital Asset Self-Mining, Digital Asset Hosted Mining, and HPC Hosting [3] - CoreWeave Inc. provides a cloud platform that supports scaling and acceleration for Generative AI, focusing on infrastructure for enterprise compute workloads [3]

Core Viewpoint - Core Scientific, Inc. (NASDAQ:CORZ) is viewed as capable of thriving independently, with opposition to its proposed $9 billion acquisition by CoreWeave [2][3][5] Group 1: Acquisition Opposition - Institutional Shareholder Services (ISS) recommends voting against CoreWeave's acquisition, citing Core Scientific's historical success [2] - Two Seas Capital, the largest active shareholder of CORZ, supports ISS's recommendation and emphasizes the company's potential for significant upside independently [3] - Concerns are raised regarding the valuation and fixed exchange ratio of the proposed deal, which may expose shareholders to increased risks [5] Group 2: Market Reaction - Following ISS's recommendation, CORZ shares surged over 5% in post-market trading, indicating growing investor support for independence [5] - In contrast, CoreWeave's shares have declined approximately 15% since the announcement of the proposed transaction [5] Group 3: Company Operations - Core Scientific, Inc. operates in digital asset mining and high-performance computing services through its self-mining, hosted mining, and HPC segments in the U.S. [6]

Group 1: Market Outlook and Economic Indicators - Steven Wieting, chief investment strategist at CIO Group, suggests maintaining a long position in technology, particularly in cybersecurity software, citing double-digit earnings growth in tech over the past few years [1] - Wieting expects revenue growth in tech to continue but anticipates a slowdown, drawing parallels to the late 1990s tech boom [1] - The current state of asset classes is characterized as a mature bull market, with the S&P trading at 27 times trailing earnings, yet Wieting believes the economy is set to improve in the coming year [1] Group 2: AI Infrastructure and Economic Performance - AI infrastructure is experiencing a significant growth rate of 42%, the fastest since the invention of the personal computer, while other sectors like construction and industrial production are lagging [2] - Consumer spending has increased by 3.5% as of mid-third-quarter data, but business caution is evident, with 90% of industries in the ISM report expressing concerns about tariffs [2] Group 3: Hot Tech Stocks - A list of 12 hot tech stocks has been compiled based on performance over the past three months and upside potential, with stocks favored by elite hedge funds [3][5] - Franklin Wireless Corp. (NASDAQ:FKWL) has shown a 3-month performance of 23.44% and is positioned to benefit from the expanding mobile hotspot market due to the rise of hybrid work models [7][9] - Core Scientific Inc. (NASDAQ:CORZ) has a 3-month performance of 36.85%, with analysts raising price targets amid potential acquisition scenarios, indicating an attractive risk/reward profile [11][12]

Core Insights - Core Scientific reported Q3 2025 revenue of $81.1 million and a net loss of $147 million [1] - Self-mining revenue was $57.4 million, with Bitcoin production declining by 55% [1] - As of the end of the quarter, the company held $453 million in cash and $241 million in Bitcoin [1] - A vote regarding the merger with CoreWeave is scheduled for October 30 [1]

Core Scientific, Inc. Financial Performance - Core Scientific, Inc. reported a quarterly loss of $0.46 per share, which was better than the Zacks Consensus Estimate of a loss of $0.85, representing an earnings surprise of +45.88% [1] - The company posted revenues of $81.1 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 24.33%, and down from $95.35 million year-over-year [2] - Over the last four quarters, Core Scientific has surpassed consensus EPS estimates four times, but has only topped revenue estimates once [2] Stock Performance and Market Outlook - Core Scientific shares have increased approximately 28.5% since the beginning of the year, outperforming the S&P 500's gain of 14.6% [3] - The future stock price movement will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.82 on revenues of $130.45 million, and for the current fiscal year, it is $1.07 on revenues of $396.77 million [7] Industry Context - The Financial - Miscellaneous Services industry, to which Core Scientific belongs, is currently ranked in the top 31% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Core Scientific's stock performance [5]

Core Viewpoint - Core Scientific reported a year-over-year decline in total revenue for Q3 2025, despite a significant increase in AI revenue by nearly 50% [1][2] Financial Performance - Total revenue for Q3 2025 was $81.1 million, a 15% decrease from $95.4 million in Q3 2024 [2] - Gross profit was $3.9 million, compared to a loss of $0.2 million in Q3 2024 [2] - The net loss for the quarter was $146.7 million, an improvement from a loss of $455.3 million in Q3 2024 [2] - Adjusted EBITDA was -$2.4 million, down from $10.1 million in the same quarter last year [2] Bitcoin Mining Operations - Revenue from bitcoin mining (self-mining and hosting) was $66.1 million, down 22% from $85 million in Q3 2024 [3] - Core Scientific reduced its own bitcoin mining operations by 20%, from 20.4 exahashes per second (EH/s) to 16.3 EH/s [4] - Bitcoin mining hosting services operations were reduced by 27%, from 3 EH/s to 2.2 EH/s [4] AI Business Growth - The AI business line generated $15 million in Q3 2025, a 45% increase from $10.3 million in Q3 2024 [5] - Core Scientific plans to have 250 megawatts (MW) online for AI colocation services by the end of the year [5] Acquisition Proposal - CoreWeave proposed an all-stock acquisition of Core Scientific valued at $9 billion, with each CORZ share worth 1/8th of a CRWV share [6] - Some investors criticized the deal, claiming it undervalues Core Scientific and serves as a "golden parachute" for management [7] - Two Seas Capital, a major shareholder, is urging a "No" vote on the acquisition in the upcoming shareholder vote on October 30, 2025 [7]

Financial Performance - Total revenue for Q3 2025 was $81,103,000, a decrease of 15% compared to $95,354,000 in Q3 2024[24] - Digital asset self-mining revenue decreased to $57,438,000 in Q3 2025 from $68,138,000 in Q3 2024, representing a decline of 16%[24] - Gross profit for Q3 2025 was $3,905,000, compared to a loss of $156,000 in Q3 2024[24] - The net loss for Q3 2025 was $146,660,000, compared to a net loss of $455,259,000 in Q3 2024[24] - Operating loss for the nine months ended September 30, 2025 was $126,305,000, a significant decline from an operating income of $20,587,000 in the same period of 2024[24] - Consolidated total revenue for the nine months ended September 30, 2025, was $239,256,000, compared to $415,747,000 for the same period in 2024, a decline of 43%[140] Assets and Liabilities - Total current assets increased to $1,061,033,000 as of September 30, 2025, compared to $903,962,000 as of December 31, 2024, representing a growth of approximately 17.4%[21] - Total liabilities increased to $3,423,940,000 as of September 30, 2025, up from $2,418,995,000 at the end of 2024, reflecting a rise of approximately 41.5%[21] - The accumulated deficit grew to $(4,237,984,000) as of September 30, 2025, compared to $(3,735,218,000) at the end of 2024, an increase of about 13.5%[21] - The company’s total assets reached $2,295,980,000 as of September 30, 2025, compared to $1,598,815,000 at the end of 2024, an increase of approximately 43.7%[21] - Current liabilities surged to $669,863,000 from $134,562,000, marking an increase of approximately 396%[21] Digital Assets - Digital assets rose significantly to $241,355,000 from $23,893,000, indicating an increase of over 908%[21] - The company reported a total of $241.4 million in digital assets at the end of the period, up from $23.9 million at the beginning of the period[47] - As of September 30, 2025, the company held 2,116 bitcoin with a carrying value of $241.4 million, all produced from its bitcoin mining operations[293] Acquisition and Strategic Initiatives - The company has proposed an acquisition by CoreWeave, which is subject to stockholder approval and other conditions[11] - The company anticipates potential synergies and value creation from the integration with CoreWeave, although actual benefits may vary[11] - The company is transitioning its facilities to support high-density colocation services and AI workloads, indicating a strategic shift in business focus[37] - The company has entered into new agreements with CoreWeave, Inc. to leverage its digital infrastructure for AI and HPC workloads, marking an expansion into new service areas[38] Expenses and Cash Flow - The company reported a total cost of revenue of $77,198,000 for Q3 2025, down from $95,510,000 in Q3 2024[24] - Stock-based compensation for Q3 2025 amounted to $30,173,000, compared to $20,523,000 in Q3 2024[26] - The company experienced a loss on legal settlements amounting to $15,075,000 in Q3 2025[24] - Net cash provided by operating activities increased to $125.2 million from $29.1 million year-over-year[33] - The company reported a net cash used in investing activities of $467.4 million for the nine months ended September 30, 2025, compared to $66.4 million in 2024[33] Shareholder and Stock Information - The weighted average shares outstanding for basic and diluted shares increased to 318,562,000 in Q3 2025 from 292,486,000 in Q3 2024[24] - The Company adopted an equity-based management incentive plan, increasing authorized shares from 40 million to 48 million[124] - As of September 30, 2025, unrecognized compensation cost totals $161.6 million, with RSUs at $102.9 million, PSUs at $55.3 million, and MSUs at $3.3 million[129] Risk Factors - The company is facing various risks related to the proposed acquisition, including market price fluctuations and potential litigation[11] - The company cannot predict future market prices of bitcoin, which could materially affect revenue and net income[294] - A hypothetical 10% increase or decrease in the price of bitcoin during the three and nine months ended September 30, 2025, would have increased or decreased net loss by approximately $5.7 million and $18.7 million, respectively[295] - The company manages commodity price risk by entering into derivative instruments to manage variability in future cash flows from forecasted energy purchases[296] Lease and Capital Expenditures - Total lease expense for the three months ended September 30, 2025, was $5,533,000, an increase of 31.2% from $4,218,000 in 2024[82] - Total lease revenue for the three months ended September 30, 2025, was $14,951,000, a 44.3% increase from $10,338,000 in 2024[86] - The company has committed approximately $1.24 billion for capital expenditures related to high-density colocation services, with $860.6 million to be passed through to customers and $319 million funded by customers as prepaid base license fees[107]