Bernstein says Core Scientific's AMD partnership could generate $14B over 15 years

Quick Take

• Bernstein pegs Core Scientific's AMD partnership at $14 billion in revenue over 15 years, structured as a 377-megawatt direct lease to AMD plus a 152-megawatt neocloud lease that AMD is backstopping with credit support.
• AMD's warrants let it buy 30 million Core Scientific shares at $23.47 apiece, vesting only if the partnership scales to its full 2.5-gigawatt potential.

Core Scientific's newly announced AMD partnership is expected to generate about $14 billion in revenue over 15 years, with the chipmaker directly backstopping part of the arrangement, according to a Bernstein research note.

The note, led by analyst Gautam Chhugani and published Thursday, breaks the 530 megawatts of contracted capacity into two pieces: a 377-megawatt lease directly to AMD under a triple-net structure, and a 152-megawatt lease to an undisclosed neocloud that AMD is supporting with credit, according to the firm.

Chipmakers step into AI leasing

The structure captures a broader shift Bernstein sees across the sector, in which chipmakers increasingly stand behind long-dated leases that allow former bitcoin miners to build AI capacity.

Core Scientific (CORZ) announced 530 megawatts of colocation deals, Hut 8 (HUT) announced 704 megawatts with a single tenant reportedly identified by the Financial Times as Nvidia, and AMD separately reserved 200 megawatts with Riot Platforms (RIOT).

Miners are the landlords with approved grid connections and powered shells, while the chipmakers lend their credit ratings to underwrite tenants that clamor for somewhere to deploy compute, in Bernstein's account.

Analysts at the brokerage and research firm view direct master leases with investment-grade tenants as superior to earlier structures that relied on a credit guarantee from a backer such as Google, arguing that they lower financing costs and reduce counterparty risk compared with leases now stretching to 15 or 20 years.

The warrant math

AMD's equity sweetener is tied to execution, Bernstein argued.

The chipmaker receives warrants to purchase 30 million Core Scientific shares at the current market price of $23.47, with vesting linked to the partnership reaching its full 2.5-gigawatt potential, according to the note.

Bernstein reads the so-called circular deals --- where semis take equity stakes, warrants or backstops in their own customers --- as less aggressive than critics fear, given compute demand that outstrips the scarce supply of powered shells and land.

Lower yield, higher margin

The AMD revenue works out to roughly $0.9 billion in average annual revenue, or about $1.8 million per megawatt, which Bernstein calculates is 5% to 25% below the $1.9 million to $2.4 million per megawatt on recent miner colocation deals. The 377 megawatts leased directly to AMD carries a triple-net structure at close to 100% margins, and the firm estimates a blended EBITDA margin near 96% across the deal.

Core Scientific has guided to $11 million to $12 million in capital expenditure per megawatt, implying total project capex of about $6 billion, of which it has already spent roughly $1 billion, according to the note. The company plans to finance the remainder through project-level bonds.

Bernstein rates Core Scientific Outperform with a $32 price target. It has contracted about 1.1 gigawatts of IT load across the AMD and CoreWeave partnerships, with roughly 2 gigawatts of further expansion potential under the AMD agreement.

The CoreWeave contract, meanwhile, is running ahead of schedule, with 437 megawatts delivered as of mid-July, against a total of 590 megawatts due for full delivery by early 2027.