CoreWeave stock rises amid Jefferies speculation on Core Scientific deal

Investing.com - CoreWeave (NYSE:CRWV) stock climbed Thursday following a Jefferies research note discussing the potential strategic rationale for CoreWeave to acquire Core Scientific (NASDAQ:CORZ). Core Scientific shares have surged nearly 38% in the past week, with InvestingPro data showing the stock currently trading in overbought territory at $16.36, giving the company a market capitalization of approximately $4.9 billion.

Jefferies suggested the timing could be opportune for CoreWeave to pursue large-scale M&A given the strong performance of its shares since its IPO. The firm noted that CoreWeave may be shifting toward a more vertically integrated infrastructure portfolio strategy.

According to Jefferies, acquiring Core Scientific’s data center capacity and platform would enable CoreWeave to expand its owned data center capabilities and reduce reliance on third-party developers for future capacity. The firm also highlighted that Core Scientific has been actively working to sign leases with additional hyperscalers to diversify its tenant base.

Jefferies indicated it could be advantageous for CoreWeave to acquire Core Scientific before additional leases are signed, potentially securing that space for itself. The firm noted such a deal would give CoreWeave the ability to "hunt for more ’raw power’" and open up more opportunities.

With power described as a "gating factor" in CoreWeave’s ability to bring on deals, Jefferies suggested the acquisition would allow CoreWeave to "more seamlessly go out and hunt power directly," potentially enabling continued top-line growth and making it easier to compete on larger deals requiring more power.

In other recent news, Core Scientific has been the subject of various analyses and developments. Jefferies analysts commented on rumors of a potential takeover by CoreWeave, which could strategically benefit both companies by integrating infrastructure and expanding data center capabilities. Cantor Fitzgerald maintained its Overweight rating with an $18.00 price target, emphasizing Core Scientific’s partnership with CoreWeave and its potential cost advantages in the AI and high-performance computing sectors. Meanwhile, JMP Securities reiterated a Market Outperform rating with a $15.00 price target, citing Core Scientific’s substantial market capitalization and debt level, and the potential for a significant increase in share price if the company fully sells out its HPC capacity.

JMP analysts also initiated coverage with a Market Outperform rating, noting the company’s growth potential post-bankruptcy and its strategic allocation of power capacity. They highlighted the potential value of Core Scientific’s HPC business, which could significantly enhance the company’s share value over time. Additionally, Bernstein analysts maintained an Outperform rating with a $17.00 price target, acknowledging Core Scientific’s recent stock performance and its strategic partnership with CoreWeave. The collaboration with CoreWeave, which has seen its value increase significantly, is expected to bolster investor confidence in Core Scientific’s future prospects.

These developments reflect a positive outlook from multiple analyst firms, with an emphasis on Core Scientific’s strategic partnerships, growth potential, and capacity to leverage its resources effectively in the AI and HPC markets.

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