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Happy Tuesday!
Earnings season kicked off our inaugural “earnings corner,” and Core Scientific stole the show, sneaking out its Q2 numbers with a surprise $14 billion AMD deal. The twist: AMD, an investment-grade name, is paying Core roughly a NeoCloud rate, repricing its book about 20% higher, and the stock fell anyway. Plus: Meta and BlackRock’s $14B El Paso gigawatt, Galaxy’s new Texas site, and Bitcoin difficulty falls year over year for only the second time ever.
BLOCKSPACE
Core Scientific’s Q2 Earnings + $14B AMD Deal, Galaxy Digital’s 74 MW Site, Meta and Blackrock’s $14B Data Center
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Core Scientific inks $14B deal with AMD, but the stock fell anyway
Core Scientific (NASDAQ: CORZ) and AMD (NASDAQ: AMD) announced an AI infrastructure partnership covering 530 MW of AI data center capacity beginning in 2027. The deal includes three five-year extension options, and AMD can expand the arrangement to as much as 2.5 GW.
Buried in the filings was a concomitant announcement for a neocloud lease, with AMD providing the backstop for the 152 MW of critical IT.
Here are some details on the announcement:
AMD signs a 15-year lease for 377 MW of critical IT over three sites, with two additional sites using AMD equipment with an undisclosed neocloud for 152 MW over a 15-year lease, as well. Core Scientific estimates completion for the initial buildouts in H1 2027, with full completion by 2028’s end.
Core Scientific forecasted just over $14 billion in revenue over the leases, and each lease includes three 5-year lease extension options.
AMD can call for another 1,925 MW through December 2028, for a total of 2.5 GW.
Lastly, AMD got warrants for up to 30 million CORZ shares at $23.47.
Not bad for a company that was in bankruptcy just a few years ago!
It’s better than the previous CoreWeave deals as well: $146/kW-month versus $120/kW-month.
On the downside, costs are going up (the build will cost $11-12 million/MW, or roughly $6 billion), driven by a labor shortage:
“The thing that’s primarily driving cost of construction today is labor. Labor is very scarce in a number of markets across the USA,” Core Scientific COO Matt Brown said on the earnings call, mirroring previous statements by Core Scientific CEO Adam Sullivan.
This morning, CORZ popped on the news 5%, but not for long. Shares went back down, ending the day flat. We can’t blame the deal or CORZ — almost everything went down today!
The market is a weighing machine and not a voting machine. Needham, for example, kept its ‘Buy’ on CORZ and targets $29 per share. Unless AI compute becomes significantly cheaper through a lack of demand, design changes in training or inference, or truly an overbuild of supply, we tend to agree with Needham and other bulls.
💬 One for the operators
Core Scientific just signed a better-priced lease with a better counterparty than some of its peers, and the stock still didn’t move. So tell us: what actually re-rates these names from here: a signed lease, a specific tenant, or megawatts you can see energized on a schedule? Hit reply — we read every one, and your answers steer our reporting.
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🚏 Check this out
Meta’s El Paso deal with BlackRock hides a wild energy footprint. To bridge the campus before it connects to the grid, the plan leans on 366 MW of on-site natural gas to power it for five years before grid transmission commences. By Charlie’s back-of-the-envelope math on the show, that’s about 400 million cubic feet a day, run through 813 modular generators. As Charlie put it: “The American mind cannot comprehend how much natural gas is in this part of the country….move aside Hoover Dam, we are building natural gas.”
A natural gas turbine power plant | Image by Pro-Per Energy Services under Creative Commons.
In the News
Meta and BlackRock form $14B venture for 1 GW El Paso AI campus
Meta (NASDAQ: META) and BlackRock (NYSE: BLK) formed a venture Tuesday to build and own a 1-gigawatt data center campus in El Paso, Texas, with estimated costs of about $14 billion. The site is already being built and is expected to start coming online in 2028. Funds managed by BlackRock will own 80% of the venture, while Meta will retain 20% and serve as the initial sole occupant.
Galaxy Digital expands AI play with 74 MW Texas data center campus
Galaxy Digital (NASDAQ: GLXY) announced Tuesday that it acquired 500 acres in McGregor, Texas, and executed a development agreement for a new AI/HPC data center campus. The first phase is expected to reach 74 MW, with Galaxy Digital now advancing the electrical infrastructure needed to support the development. Galaxy said the site could expand into a multi-hundred-megawatt campus through 2030, although it did not provide a final capacity target.
Bitcoin difficulty falls year over year for only second time: Hashrate Index
Bitcoin data provider Hashrate Index said Tuesday that Bitcoin network difficulty and implied hashrate have fallen year over year for only the second time in the network’s history. The previous decline occurred in mid-2021, when China’s mining ban took roughly half of the network’s computing power offline. Miners subsequently relocated equipment, and difficulty returned to record highs within months.
B. Riley keeps $66 Applied Digital target after fiscal Q4 EBITDA beat
B. Riley Securities reiterated its Buy rating and $66 price target for Applied Digital (NASDAQ: APLD) after the AI infrastructure developer reported fiscal fourth-quarter adjusted EBITDA of $42.4 million. The result exceeded B. Riley’s $24.6 million estimate and the $25.6 million consensus forecast.
The Daily Meme
An oldie, but a goodie. “Get in loser, we’re building nat gas.”
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