Bullish SA Coverage Highlights Colocation Growth, but Key Risks Remain Unaddressed

What happened

A new Seeking Alpha article rates Core Scientific a Buy, emphasizing robust colocation revenue, long-term contracts with AMD and CoreWeave, and forecasts FY2026 revenue of $671.6M (111% YoY growth) with EBITDA hitting $194M by FY2028. Our DeepValue review, in contrast, notes that Q1’26 filings still show 67% of total revenue from one colocation customer and unleased MW climbing to 685 MW while leased MW stuck at 590 MW. The article’s optimism sidesteps the $1.47B in near-term contractual commitments and $80M restricted cash that pressure liquidity. The bullish thesis therefore hinges on accelerating customer diversification and timely deployment not yet evident in reported metrics. Without new multi-customer contracts, the stock prices an assumption that the unleased MW inventory will be quickly absorbed at attractive economics.

Implication

The Seeking Alpha piece reinforces the market’s AI-infrastructure narrative and could attract momentum buyers, potentially pushing the stock above our $36 trim level. However, core concerns—single-customer dependence, rising unleased capacity, and heavy secured leverage—remain unaddressed, leaving equity highly sensitive to execution slippage. Investors should monitor upcoming filings for new large HPC contracts that materially reduce concentration, as that would validate the bull case. Absent such progress, the current valuation embeds perfection and faces sharp downside if deployment timelines slip. We maintain a WAIT rating and would use article-driven strength above $36 to trim positions.

Thesis delta

The new article does not alter our investment thesis; it amplifies the bull narrative without resolving the identified risks. The colocation moat is real, but until leased MW exceeds 600 MW and customer concentration falls below 50%, the equity remains a high-risk execution story. We see no change to our base-case implied value of $28 or our WAIT rating.