Key Takeaways
- • StoneX maintained a 'Buy' rating on Galaxy Digital (GLXY) with a $57 price target, arguing the shares trade well below intrinsic value after a roughly 30% decline over two weeks.
- • The selloff was driven by concerns over CoreWeave, the sole contracted customer for the initial 800 MW at Galaxy's Helios AI data center in Texas, as CoreWeave's debt reached $35.6 billion at the end of June and borrowing costs rose.
- • StoneX analyst Mark Palmer said the market may be overpricing the risk, citing CoreWeave's backlog, which quadrupled over five quarters through June to $104 billion.
- • Galaxy first supplied 133 MW of critical IT power to CoreWeave in July, plans 526 MW in phases under a 15-year lease, and recorded its first Helios revenue in Q2, though it posted an overall net loss of $85 million.
- • StoneX's valuation effectively assigns little value to Galaxy's crypto operations, which it sees as a further source of upside.
Summary
StoneX reiterated its 'Buy' rating on Galaxy Digital Holdings Ltd. (GLXY) and maintained a $57 price target, according to a report by The Block on October 19. The investment bank said the current share price is too low relative to the company's value and does not fully reflect the growth potential of its AI data-center business. Per the report, the shares were up 2.5% at $16.57 on the day, following a decline of roughly 30% over the previous two weeks.
The selloff has been driven by concerns about CoreWeave, which is the sole customer contracted for an initial 800 megawatts of power capacity at Galaxy's Helios AI data center in Texas. Investors have grown wary of CoreWeave's ability to meet those commitments as its debt reached $35.6 billion at the end of June and its borrowing costs increased. StoneX analyst Mark Palmer said, "The core concern is that contractual cash flow from the initial 800 MW at the Helios data center depends on a single customer whose cost of capital has surged." He added that the market may be overpricing that risk, pointing to CoreWeave's backlog, which quadrupled over the five quarters through June to $104 billion.
StoneX also cited rising demand for AI computing as a positive factor. Palmer said investment in computing infrastructure is increasing as usage of AI services grows, even as prices for AI-related tokens fall, and that demand for graphics processing units continues to outstrip supply. The firm views this as supporting the medium- to long-term growth outlook for the data-center business.
Galaxy first supplied 133 MW of critical IT power to CoreWeave in July and plans to provide a total of 526 MW in phases under a 15-year lease agreement. Helios recorded its first revenue in the second quarter, although Galaxy posted an overall net loss of $85 million. The company has also secured a site in McGregor, Texas, for a second AI data center. StoneX's analysis implies little value for Galaxy's crypto operations, suggesting that the stock's current pricing does not reflect either the data-center expansion or the crypto business.
The selloff has been driven by concerns about CoreWeave, which is the sole customer contracted for an initial 800 megawatts of power capacity at Galaxy's Helios AI data center in Texas. Investors have grown wary of CoreWeave's ability to meet those commitments as its debt reached $35.6 billion at the end of June and its borrowing costs increased. StoneX analyst Mark Palmer said, "The core concern is that contractual cash flow from the initial 800 MW at the Helios data center depends on a single customer whose cost of capital has surged." He added that the market may be overpricing that risk, pointing to CoreWeave's backlog, which quadrupled over the five quarters through June to $104 billion.
StoneX also cited rising demand for AI computing as a positive factor. Palmer said investment in computing infrastructure is increasing as usage of AI services grows, even as prices for AI-related tokens fall, and that demand for graphics processing units continues to outstrip supply. The firm views this as supporting the medium- to long-term growth outlook for the data-center business.
Galaxy first supplied 133 MW of critical IT power to CoreWeave in July and plans to provide a total of 526 MW in phases under a 15-year lease agreement. Helios recorded its first revenue in the second quarter, although Galaxy posted an overall net loss of $85 million. The company has also secured a site in McGregor, Texas, for a second AI data center. StoneX's analysis implies little value for Galaxy's crypto operations, suggesting that the stock's current pricing does not reflect either the data-center expansion or the crypto business.
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