StoneX reiterated its Buy rating and $57 price target for Galaxy Digital in a note to clients. StoneX argued that Galaxy's current valuation undervalues Galaxy's AI data center business and effectively assigns no value to Galaxy's digital asset operations. Galaxy Digital (GLXY) shares have fallen about 30% in two weeks amid concerns about CoreWeave's financial health. CoreWeave is the neocloud provider contracted as the sole tenant for the first 800 megawatts of capacity at Galaxy's Helios campus in West Texas.
The concerns center on CoreWeave's rising borrowing costs and $35.6 billion in outstanding debt at the end of June. StoneX analyst Mark Palmer wrote in Monday's note that contracted cash flows for Helios's first 800 megawatts depend on one counterparty whose cost of capital has jumped. However, Palmer argued that investors should also consider Galaxy's options for expanding Helios and the broader outlook for AI computing demand.
Palmer cited CoreWeave's contracted backlog, which nearly quadrupled to $104 billion in the five quarters through June, as a reason the market may be overstating risks. Palmer also cited firm GPU rental rates and growing demand for computing power. Palmer wrote that rising usage is driving increased spending on AI computing despite falling AI token prices. Palmer wrote that demand for GPUs continues to exceed supply.
Galaxy delivered the first 133 megawatts of critical IT load in July under a 15-year lease. CoreWeave committed to 526 megawatts of critical IT load across three phases. Helios has contracted the full 800 megawatts of gross power.
Galaxy reported an $85 million net loss for the second quarter, even as Helios generated its first revenue. Helios generated $20 million in adjusted gross profit. Helios generated $11 million in adjusted EBITDA. Galaxy has also acquired land for a second Texas AI data center campus in McGregor. Galaxy shares traded up 2.5% to $16.57 on Monday.
StoneX Reiterates Buy Rating for Galaxy Digital Amid AI Data Center Growth
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Summary
StoneX reiterated a Buy rating for Galaxy Digital (GLXY), setting a $57 price target as it sees undervaluation in the digital asset market and AI data center operations. Galaxy shares fell 30% in two weeks due to worries over CoreWeave’s $35.6 billion debt. Analyst Mark Palmer pointed to strong GPU rental rates and rising demand for AI computing. Galaxy delivered 133 megawatts in July and has secured the full 800 megawatts at Helios. The firm also acquired land for a second Texas AI data center. Recent inflation data has not yet impacted the broader digital asset market.
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