Shark Bites: A Low-Priced Stock at the Intersection of Bitcoin and AI
Here's what to know about this leader in the Bitcoin mining group — and how to trade it.
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The market action is mixed Tuesday as market players await CPI news on Wednesday and the presidential debate on Tuesday night. Breadth is running negative, and there appears to be very limited buying interest.
I am not doing much trading right now, but I am doing some research — and have been looking into an interesting name.
Bitcoin mining and artificial intelligence (AI) are two major market themes that have one very big thing in common. They both need software, hardware, and tremendous computing power in order to function.
The value of Bitcoin mining obviously fluctuates with the value of Bitcoin, so it can be a less attractive business during downcycles in cryptocurrencies. However, innovative companies such as Core Scientific Inc. CORZ can diversify their risk by leasing their High-Performance Computing (HPC) to companies that need additional computer power.
A Need for Power
There has been a booming need for HPC in the development of AI. Companies are building data centers at a record pace. On Oracle's ORCL earnings conference call Monday night, Chairman Larry Ellison said that Oracle currently has 162 data centers, and there is room for 1,000 to 2,000 more.
There are other Bitcoin miners that are looking to lease their HPC power, but so far, Core Scientific is the leader in the Bitcoin mining group due to its relationship with CoreWeave, which offers a public cloud that can be used to train the large language models that are used in AI. Privately held CoreWeave, a specialized cloud provider for GPU-accelerated workloads, has a relationship with Nvidia NVDA for GPUs, and they are using Core Scientific facilities for HPC.
Current estimates are that CoreWeave has leased around $6.7 billion in HPC over the next 12 years from Core Scientific and has options for more.
Wall Street Weighs In
Core Scientific is currently expecting earnings of $0.43 per share in 2025, which gives it a forward P/E multiple of about 23x. Eight analysts follow the stock. The highest price target among those is $20, and the lowest is $13. The average price target is $16.13, which is about a 62% increase from the current levels.
Recently, Needham initiated coverage of CORZ with a Buy rating and $16 price target. The firm stated that "CORZ is the first mover among bitcoin miners in what will be a fast-growing, high-demand environment for high-performance compute data center capacity."
Needham expects Core Scientific to be first to market with a 100MW-plus site, positioning it as "The Early Mover" in retrofitting mining sites to high-performance computing. Needham believes the company's first customer agreement with CoreWeave is a unique deal among peers and offers attractive economics and terms. It estimates $500 million in annualized revenue in 2026 and $400 million in gross profit from the HPC contribution.
Trading the Stock
Technically, CORZ stock is in a trading range and exhibiting very good relative strength compared to its Bitcoin peers. I am watching for a breakout over the $11 area and will be aggressively trading the stock.
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At the time of publication, Rev Shark was long CORZ.
