On Monday, Benchmark maintained a positive stance on Galaxy Digital Holdings Ltd (TSX:GLXY:CA) (OTC: BRPHF), reiterating its Buy rating and a price target of Cdn$41.00. The financial services firm, which has delivered an impressive 128% return year-to-date according to InvestingPro data, is being recognized for its strategic positioning at the intersection of two significant trends: the demand for resources by AI hyperscalers and the increasing interest in cryptocurrencies from institutional investors.
Galaxy Digital, which is preparing to construct high-performance computing (HPC) infrastructure at its Helios data center in West Texas, is also operating trading and asset management services to support the growing institutional adoption of cryptocurrencies. The Helios facility has garnered considerable attention from investors, indicating the potential for substantial financial gains as the company progresses in monetizing the center.
The interest in Galaxy Digital’s Helios facility was evident in the questions posed by investors, highlighting the potential financial upside. The company, in its 3Q24 report released on November 7, disclosed that it had signed a non-binding term sheet with an unnamed U.S.-based AI hyperscaler. The agreement includes options for all 800 MW of Helios’s approved power capacity to support the hyperscaler’s AI/HPC operations.
Benchmark analysts project that Galaxy Digital could achieve revenue per MW that surpasses the approximately $1.5 million revenue per MW demonstrated by the CORZ transaction. The firm’s optimistic outlook is supported by the potential earnings from the existing and future power capacity at Helios.
The reiterated price target of Cdn$41 is based on a multiple of 5 times the company’s book value per share as of September 30. With a current P/E ratio of 5.75 and a market capitalization of $6.13 billion, InvestingPro analysis suggests the stock is currently undervalued, supporting Benchmark’s optimistic outlook. The company maintains a healthy financial position with a current ratio of 1.85 and has earned an overall "GREAT" Financial Health Score of 3.2 on InvestingPro.
Benchmark believes that this valuation is justified by the significant growth opportunities presented by Galaxy Digital’s involvement in AI infrastructure and the cryptocurrency market. For deeper insights into Galaxy Digital’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US equities with expert analysis and actionable intelligence.
In other recent news, Galaxy Digital Holdings Ltd.
experienced significant growth in its counterparty trading business and assets under management, despite reporting a net loss of $54 million for the third quarter. The company’s Q3 revenue from its counterparty trading business increased by 117% quarter-over-quarter, and its average loan book size grew by 23% in the same period. Additionally, assets under management rose by 2% quarter-over-quarter, with the introduction of three new ETFs.
Galaxy Digital’s blockchain infrastructure and mining business revenues also increased, with a 46% direct mining profit margin. The company has entered into a nonbinding agreement with a U.S. hyperscaler to develop AI infrastructure, aiming to diversify revenue and reduce volatility.
According to a recent Benchmark analyst, Galaxy Digital’s shares target was raised, with a maintained Buy rating. This is due to the potential of its Helios initiative to power AI and high-performance computing projects, as well as the growing institutional adoption of cryptocurrency. The company ended the quarter with equity capital at $2.1 billion and total liquid assets at $1.5 billion.
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