Craig-Hallum cuts Core Scientific stock price target on Texas permit concerns

Craig-Hallum cut its Core Scientific price target to $25 from $35 but maintained a Buy rating; shares had fallen 14% over the prior week to $11.89. Analyst George Sutton said Texas air-permit decisions may come in December or soon thereafter and expects AMD-buildout financing to proceed quickly once permits are received; the company has 1.1 GW of signed capacity, nearly 500 MW energized and billing, and CoreWeave has funded a significant portion of spending upfront. Separately, Core Scientific’s Q3 2026 colocation revenue rose 59.5% sequentially to $215 million and adjusted EBITDA more than tripled to $134 million, while investors remain concerned about capital requirements and the shift away from Bitcoin mining.

Analysis

The key re-rating question is whether CORZ can convert energized capacity into durable, cash-generative colocation earnings—not whether announced capacity is large. The reported operating ramp is encouraging, but EBITDA growth alone does not establish cash conversion: build costs, power costs, customer incentives and ongoing capital spending could absorb much of the improvement. Up-front CoreWeave funding may reduce near-term funding pressure, but verify how much spend it covers and whether the contract economics protect CORZ if deployment slips or demand changes.

Near term, Texas permitting and financing terms are the gating catalysts; the analyst’s “low-risk” characterization is not independently verified. In 1–3 months, permit timing, financing disclosure and evidence of continued capacity activation should matter more than another analyst target change. Over 6–18 months, execution and customer concentration are the structural tests. A successful pivot could improve CORZ’s earnings quality versus mining exposure; failed or delayed deployments risk stranded power/capacity and renewed dependence on capital markets. Other data-center developers may compete for power, equipment and customers, but the article provides no basis to quantify share gains or losses.

Contrarian angle: the market may be treating the pivot as a binary, while the real risk is gradual margin and cash-flow leakage even if projects proceed. Conversely, a sharp price decline is not by itself proof of mispricing; the cited fair-value estimate is not a substitute for project-level cash-flow evidence.

Key Decisions for Investors

• No immediate chase based solely on the analyst’s rating or headline earnings growth. Put CORZ on a catalyst watch pending confirmation of Texas permits and AMD-project financing terms.
• If permits arrive and financing is disclosed on acceptable terms, consider a staged, modest long CORZ; size against execution and customer-concentration risk rather than headline signed capacity.
• Track quarterly cash conversion alongside colocation revenue and adjusted EBITDA, plus energized capacity and capital spending. Weak cash conversion despite continued EBITDA growth would challenge the bull case.
• Falsify the near-term catalyst thesis if permitting slips materially beyond the indicated window, financing is delayed or materially more dilutive/costly than expected, or deployment milestones stall. Reassess rather than averaging down.