CoreWeave Inc. CRWV is in talks to acquire Core Scientific Inc CORZ

Needham On Core Scientific

Analyst John Todaro reiterated a Buy rating and price target of $18.

There are four reasons why the proposed acquisition "make sense," Todaro said in a note. It would eliminate around $850 million in annual lease expenses and give CoreWeave ownership of the 590MW of capacity it has contracted with Core Scientific, he added.

"CRWV would have ~300MW in additional capacity after an acquisition, which has the potential to be suitable for HPC/AI workloads," the analyst wrote. CoreWeave would also own sites that are "highly suitable for inference workloads," as Core Scientific's sites are mostly near major metro areas, he further stated.

Check out other analyst stock ratings.

Canaccord Genuity On Core Scientific

Analyst Joseph Vafi maintained a Buy rating and price target of $17.

Core Scientific's stock climbed on news of the potential acquisition deal with its "large strategic customer, CoreWeave," Vafi said. A deal between these two companies "makes strategic sense in many ways," he wrote.

Most of Core Scientific's data center portfolio is being repurposed from Bitcoin mining to AI data center. CoreWeave has already procured much of this capacity under long-term contracts, the analyst stated. By acquiring Core Scientific, CoreWeave would no longer need to pay service costs, he added.

CORZ, CRWV Price Action: Shares of Core Scientific were up 0.76% to $16.52 at the time of publication on Friday; CoreWeave shares are up 5.73% at $167.23.

Read More:
• CRWV–CORZ Potential Deal Could Unlock $2.8 Billion Hidden Value For Bitcoin Miner, Says Morgan Stanley

Photo: Shutterstock