Core Scientific Inc (NASDAQ: CORZ) soared nearly 30% on Thursday following a WSJ report that CoreWeave Inc (NASDAQ: CRWV) is making another attempt to acquire the bitcoin mining and hosting company.
According to The Wall Street Journal, management from both companies are already in advanced talks and a potential deal could be announced within the next few weeks.
Including today’s rally, Core Scientific stock is up close to 150% versus its YTD low in late April.
Why does CoreWeave want to buy Core Scientific?
CoreWeave is making another attempt to acquire Core Scientific because its interest in the Nasdaq-listed firm is rooted in strategic necessity.
As demand for AI compute infrastructure explodes, hyperscalers like CRWV are racing to secure access to high-density, energy-efficient data center capacity.
Core Scientific Inc, with over 1.3 gigawatts of contracted power and a footprint spanning eight U.S. states, offers precisely that.
Investors should also note that CoreWeave already has a significant commercial relationship with CORZ.
In 2023, those two firms inked a series of 12-year contracts under which Core Scientific agreed to provide over 590 megawatts of hosting capacity to CoreWeave across six sites.
These deals are expected to generate more than $10 billion in revenue over their lifetime.
By acquiring CORZ outright, CoreWeave could vertically integrate its infrastructure stack, reduce long-term hosting costs, and gain tighter control over deployment timelines.
Moreover, Core Scientific’s infrastructure is optimized for high-performance computing (HPC) workloads – a critical requirement for training and running large AI models.
As CRWV scales its GPU cloud offerings, owning a purpose-built infrastructure provider could enhance its margins and operational agility.
For CoreWeave stock, what this acquisition (if completed) signals is a bold expansion strategy and reinforces the company’s positioning as a dominant player in the AI infrastructure arms race.
Is it too late to invest in Core Scientific stock?
What CoreWeave is willing to pay for a potential Core Scientific buyout remains yet to be revealed.
And while such agreements are often signed on a significant premium, it’s reasonable to practice caution in buying CORZ at current levels given today’s rally may have baked in that premium in Core Scientific stock already.
Investors should also note that a potential takeover is far from confirmed yet.
Therefore, if CRWV denies the WSJ report in the coming days – CORZ shares could tank right back to the price at which they opened today.
The fact that only one Wall Street analyst currently covers Core Scientific stock should serve as another red flag.
More importantly, even one analyst has a price target of $5.0 on CORZ shares indicating a potential downside of nearly 70% from here.
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