Key Takeaways
- • StoneX reiterated a Buy rating and $57 price target on Galaxy Digital (GLXY), arguing the market undervalues its AI data center business and assigns effectively no value to its digital asset operations, according to The Block.
- • Galaxy Digital shares have fallen about 30% in two weeks on concerns over CoreWeave's financial health, with CoreWeave carrying $35.6 billion in debt outstanding at the end of June.
- • CoreWeave is the sole tenant for the first 800 megawatts at Galaxy's Helios campus in West Texas, and its contracted backlog nearly quadruples to $104 billion over the five quarters through June.
- • Galaxy delivered the first 133 megawatts of critical IT load in July under a 15-year lease and reported an $85 million Q2 net loss, with $20 million in adjusted gross profit and $11 million in adjusted EBITDA.
Summary
Galaxy Digital shares are under pressure from investor concern over the financial health of CoreWeave, the cloud provider that is the sole tenant for the first 800 megawatts of capacity at Galaxy's Helios AI data center campus in West Texas. According to The Block, Galaxy shares have fallen roughly 30% in two weeks as investors weigh CoreWeave's rising borrowing costs and its $35.6 billion in debt outstanding at the end of June.
StoneX maintains a Buy rating and a $57 price target on Galaxy. In a note to clients, analyst Mark Palmer argues the market may be overstating the risks. He points to CoreWeave's contracted backlog, which nearly quadruples to $104 billion over the five quarters through June, as well as firm GPU rental rates and sustained demand for computing power. StoneX contends the current valuation understates the AI data center business and effectively assigns no value to Galaxy's digital asset operations.
Galaxy's operating milestones support the expansion case. In July the company delivered the first 133 megawatts of critical IT load under a 15-year lease. CoreWeave has committed to 526 megawatts of critical IT load across three phases, with Helios contracting the full 800 megawatts of gross power. Palmer also points to Galaxy's options for expanding Helios and to rising AI compute demand, noting that higher usage is driving greater spending on AI compute even as AI token prices fall.
Financially, Galaxy reported an $85 million net loss for the second quarter, even as Helios began generating revenue, including $20 million in adjusted gross profit and $11 million in adjusted EBITDA. The company has also acquired land for a second Texas AI data center campus in McGregor. GLXY shares traded up 2.5% to $16.57 on Monday, according to the report.
The episode highlights the broader sensitivity of AI data center developers to financing costs, construction timelines, and power constraints, as well as the reliance of developers on the credit quality of their anchor tenants.
StoneX maintains a Buy rating and a $57 price target on Galaxy. In a note to clients, analyst Mark Palmer argues the market may be overstating the risks. He points to CoreWeave's contracted backlog, which nearly quadruples to $104 billion over the five quarters through June, as well as firm GPU rental rates and sustained demand for computing power. StoneX contends the current valuation understates the AI data center business and effectively assigns no value to Galaxy's digital asset operations.
Galaxy's operating milestones support the expansion case. In July the company delivered the first 133 megawatts of critical IT load under a 15-year lease. CoreWeave has committed to 526 megawatts of critical IT load across three phases, with Helios contracting the full 800 megawatts of gross power. Palmer also points to Galaxy's options for expanding Helios and to rising AI compute demand, noting that higher usage is driving greater spending on AI compute even as AI token prices fall.
Financially, Galaxy reported an $85 million net loss for the second quarter, even as Helios began generating revenue, including $20 million in adjusted gross profit and $11 million in adjusted EBITDA. The company has also acquired land for a second Texas AI data center campus in McGregor. GLXY shares traded up 2.5% to $16.57 on Monday, according to the report.
The episode highlights the broader sensitivity of AI data center developers to financing costs, construction timelines, and power constraints, as well as the reliance of developers on the credit quality of their anchor tenants.
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