Galaxy's AI data center business is undervalued amid CoreWeave debt concerns, StoneX says

Galaxy Digital (GLXY) shares have fallen about 30% in two weeks amid concerns about the financial health of CoreWeave, the neocloud provider that is the sole tenant contracted for the first 800 megawatts of capacity at Galaxy's Helios AI data center campus in West Texas.

In a note to clients, StoneX reiterated its Buy rating and $57 price target, arguing that Galaxy's current valuation undervalues its AI data center business and effectively assigns no value to its digital asset operations. The concerns center on CoreWeave's rising borrowing costs and $35.6 billion in debt outstanding at the end of June.

"The concerns about GLXY stem from the fact that the contracted cash flows for the first 800 MW at its Helios data center complex rest on a single counterparty whose cost of capital has jumped," analyst Mark Palmer wrote in Monday's note. However, he argued that investors should also consider Galaxy's options for expanding Helios and the broader outlook for AI computing demand.

Palmer pointed to CoreWeave's contracted backlog, which nearly quadrupled to $104 billion in the five quarters through June, along with firm GPU rental rates and growing demand for computing power, as reasons the market may be overstating the risks.

Despite falling AI token prices, he wrote, rising usage is driving increased spending on AI compute, while demand for GPUs continues to outstrip supply.

In July, Galaxy delivered the first 133 MW of critical IT load under a 15-year lease. CoreWeave committed to 526 MW of critical IT load across three phases, with Helios contracting the full 800 MW of gross power.

Galaxy reported an $85 million net loss for the second quarter, even as Helios generated its first revenue, including $20 million in adjusted gross profit and $11 million in adjusted EBITDA. The company is also expanding beyond Helios, having acquired land for a second Texas AI data center campus in McGregor.

GLXY shares traded up 2.5% to $16.57 on Monday.