Core Scientific-CoreWeave Merger: A Benchmark for AI Investor Confidence
The proposed $9 billion all-stock acquisition of Core Scientific by AI cloud computing firm CoreWeave has emerged as a critical barometer for investor confidence in the burgeoning artificial intelligence sector. While heralded by CoreWeave as a strategic move to secure essential data center capacity amidst soaring AI demand, the deal faces a significant challenge that could signal broader market sentiment.
CoreWeave, an “AI Hyperscaler” that successfully completed its initial public offering in March 2025, aims to acquire Core Scientific, a leading data center infrastructure provider, to bolster its energy and real estate footprint. This strategic vertical integration is designed to provide CoreWeave with approximately 1.3 gigawatts of gross power across Core Scientific’s national data center footprint, with an additional gigawatt available for future expansion. The acquisition is intended to enhance CoreWeave’s operational efficiency, strengthen revenue growth, and improve profitability by eliminating over $10 billion in future lease overhead. CoreWeave also plans to repurpose Core Scientific’s assets, previously focused on Bitcoin mining, towards high-performance computing (HPC) workloads, or potentially divest the crypto mining operations entirely.
Under the terms of the definitive agreement signed on July 7, 2025, Core Scientific shareholders are set to receive 0.1235 newly issued shares of CoreWeave Class A common stock for each share of Core Scientific common stock they hold. The transaction, which has received approval from both companies’ boards of directors, is anticipated to finalize in the fourth quarter of 2025, pending regulatory and Core Scientific shareholder approval.
However, the path to completion has become less certain following recent developments. Two Sails Capital, the largest active shareholder in Core Scientific, has publicly announced its intention to vote against the merger. Their opposition centers on the all-stock nature of the deal, which they argue represents an “inadequate valuation” for Core Scientific shareholders. This structure, according to Two Sails Capital, exposes shareholders to the high volatility of CoreWeave’s share price without sufficient protection. These concerns have been amplified by a significant drop in CoreWeave’s stock price after its second-quarter earnings report, which revealed larger-than-expected losses despite higher-than-anticipated revenue. The firm’s profitability guidance and increased borrowing costs have further fueled shareholder apprehension.
This merger unfolds against a backdrop of intense investment in AI infrastructure, which is widely recognized as a cornerstone for future technological advancement. The demand for specialized data centers equipped with robust GPU resources to power large language models, machine learning, and generative AI applications is driving unprecedented capital expenditure. Major cloud providers, including Google, Amazon, Meta, and Microsoft, are collectively investing hundreds of billions of dollars in AI-ready infrastructure, with the “big four AI hyperscalers” alone projected to spend approximately $596 billion in 2025, a 35% increase from the previous year. Analysts project the global AI infrastructure market to exceed $200 billion by 2028, with global AI data center spending potentially surpassing $1.4 trillion by 2027.
Despite the enormous growth opportunities, the sector grapples with challenges such as high capital costs, regulatory hurdles, and constraints on vital resources like power and graphics processing units (GPUs). While investor confidence in AI’s transformative potential remains high, with significant venture capital flowing into AI startups, some experts caution that widespread profitability from these investments may not materialize for another three to five years. The Core Scientific-CoreWeave merger, therefore, serves as a crucial test case, illustrating the complexities and potential friction points that can arise even in a market with seemingly insatiable demand. Its resolution will undoubtedly provide a clearer signal on the delicate balance between strategic ambition and shareholder value in the rapidly evolving AI landscape.