A new report from Bernstein indicates that the returns Core Scientific has been reporting from its artificial intelligence colocation business are being distorted by the financing it receives from CoreWeave. The finding raises questions about how much of the company's recent AI revenue growth is organic versus dependent on a single partner's capital.
What the report says
Bernstein, a research firm, examined Core Scientific's financial disclosures and concluded that the returns attributed to its AI colocation segment are skewed by the funding provided by CoreWeave. CoreWeave, a cloud computing company focused on AI workloads, has been a key customer and investor in Core Scientific's infrastructure. The report does not specify the exact magnitude of the skew, but it suggests that without the CoreWeave funding, the returns would look significantly different.
Core Scientific originally built its business around bitcoin mining but has been pivoting toward hosting AI computing hardware. The company's colocation services involve housing and operating high-performance servers for clients, with CoreWeave being one of the largest. The Bernstein report implies that the financial terms of that relationship may be inflating the apparent profitability of the AI colocation unit.
Why the skew matters
For investors and analysts tracking Core Scientific's transition from a pure-play bitcoin miner to a hybrid AI infrastructure provider, the skew complicates the picture. If the returns are artificially boosted by CoreWeave's funding, then the underlying business may be less profitable than it appears. That could affect valuations and future investment decisions.
The report does not accuse Core Scientific of any wrongdoing. It simply points out that the returns are not purely a reflection of market demand for AI colocation services. Instead, they are partly a function of the financial arrangement with CoreWeave. Bernstein's analysis suggests that investors should adjust their expectations accordingly.
Core Scientific has not publicly responded to the Bernstein report as of this writing. The company is scheduled to report its next quarterly earnings in the coming weeks, which may provide more clarity on the breakdown of its AI colocation revenue and the role of CoreWeave funding. Investors will be watching to see whether the company addresses the skew directly or offers additional disclosure about the terms of its relationship with CoreWeave.
The report also leaves an open question: if CoreWeave were to reduce or restructure its funding, how would that affect Core Scientific's AI colocation returns? Without more details from the company, the market will have to wait for the next earnings call to get a clearer picture.
