Galaxy Digital Slides 30% in Two Weeks on CoreWeave Financial Concerns; StoneX Says Stock Is Undervalued
Summary
- StoneX said Galaxy Digital remains a 'Buy' with a $57 price target, adding that the current share price is too low relative to the company’s value.
- While financial concerns intensified because cash flow from the Helios AI data center depends on CoreWeave alone, StoneX said the market may have overreacted to the risk, citing CoreWeave’s expanding $104 billion backlog.
- StoneX said the data-center business has strong medium- to long-term growth potential, supported by rising demand for AI computing and GPUs, Helios’s first revenue and the acquisition of a site for a second AI data center.
Forecast Trend Report by Period
Galaxy Digital Holdings Ltd. (GLXY) has slumped as concerns over the financial health of CoreWeave, a key customer for its AI data-center business, weighed on the stock. StoneX said the drop has left the shares trading well below the company’s intrinsic value.
The Block reported on Oct. 19 that StoneX maintained its buy rating on Galaxy Digital and kept its $57 price target. The investment bank said the current share price does not fully reflect the growth potential of the company’s AI data-center business and effectively assigns little value to its crypto operations.
The recent share decline has been driven by CoreWeave’s financial burden. CoreWeave is the sole customer contracted for an initial 800 megawatts of power capacity at Galaxy Digital’s Helios AI data center in Texas. But concerns about its ability to meet those commitments have grown as its debt reached $35.6 billion at the end of June and borrowing costs increased.
“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,” StoneX analyst Mark Palmer said. He added that the market may be overpricing the risk, citing CoreWeave’s backlog, which quadrupled over the five quarters through June to $104 billion.
Rising demand for AI computing was also cited as a positive factor. Palmer said investment in computing infrastructure is increasing as usage of actual AI services rises, even as prices for AI-related tokens fall. Demand for graphics processing units, or GPUs, continues to outstrip supply, supporting the medium- to long-term growth outlook for the data-center business.
Galaxy Digital 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 of this year, though Galaxy Digital posted a net loss of $85 million overall. The company has also secured a site in McGregor, Texas, for a second AI data center. Galaxy Digital shares were up 2.5% at $16.57 on the day.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.