CoreWeave $9 Billion AI Power Grab Sparks Controversy as Analyst Slams Deal for Undervaluing Core Scientific
The all-stock deal aims to secure critical power for CoreWeave's AI ambitions, but the market and analysts are questioning if Core Scientific shareholders are getting short-changed.
NEW YORK, NY – In a bold move to quench the insatiable thirst for power driven by the artificial intelligence boom, data-center operator CoreWeave (CRWV) has announced a definitive agreement to acquire infrastructure partner Core Scientific (CORZ) in an all-stock transaction valued at approximately $9 billion.
The deal, announced Monday, is a strategic play to vertically integrate a critical component of the AI supply chain: electricity. CoreWeave, which has seen its stock quadruple since its March IPO, plans to take direct ownership of 1.3 gigawatts of power across Core Scientific’s footprint. This move is designed to eliminate lease costs, streamline operations, and gain crucial control over a resource that has become a major bottleneck for AI expansion.
“Owning this foundational layer of our platform will enhance our performance and expertise as we continue helping customers unleash AI’s full potential,” said CoreWeave CEO Michael Intrator in a statement.
However, the ambitious acquisition was met with immediate skepticism, with the stock of both companies falling and one prominent analyst arguing the purchase price significantly undervalues Core Scientific’s business and potential.
A Deal That “Appears Low”
While the merger seems strategically sound for CoreWeave, the financial terms have raised eyebrows. Brett Knoblauch, an analyst at Cantor Fitzgerald, wrote in a note to clients Monday that the acquisition price “appears low” for Core Scientific shareholders.
Under the terms, Core Scientific investors are set to receive 0.1235 newly issued CoreWeave shares for each of their own. Based on CoreWeave’s Thursday closing price, this amounted to a value of $20.40 per share. However, Knoblauch pointed out this is only a 10% premium above Core Scientific’s all-time high from November 2024.
He estimates that after accounting for the value of its existing infrastructure, Core Scientific is effectively selling its core business for roughly $6 billion. This implies a valuation multiple of just 8.6 times its run-rate EBITDA, a figure Knoblauch suggests is far too low, especially considering the company’s potential to restructure as a real-estate investment trust (REIT), where comparable companies trade for more than double that multiple.
Market Reacts with Caution
The market appears to share some of this apprehension. In a telling sign, shares of both companies fell on the news. CoreWeave’s stock dropped 2.9% to $160.08 on the dilution from issuing new stock, while Core Scientific’s stock plummeted 15.8% to $15.16.
This steep drop in Core Scientific’s share price creates a significant gap between its trading value and the implied acquisition price, suggesting investors have doubts about the deal’s value or certainty of closing.
The deal highlights the immense pressure on AI companies to secure power. Jefferies analyst Jonathan Petersen previously noted that power has been a “gating factor” for CoreWeave. This acquisition gives them the ability to “hunt power directly,” a critical advantage in competing for larger and more demanding AI contracts.
But for Core Scientific shareholders, the question remains whether they are cashing in their valuable assets too cheaply, exchanging them for a high-flying stock in a deal that one analyst believes leaves billions of potential value on the table.
