Galaxy Digital's Data Center Hype Amplified by New Article, But DeepValue Report Urges Caution on Execution

What happened

A Seeking Alpha article claims Galaxy Digital is deeply undervalued, with its data center business potentially worth $50-$70 per share due to the Helios acquisition and a 15-year CoreWeave contract for 800 MW capacity. This optimistic view contrasts with the DeepValue master report's HOLD/NEUTRAL stance, which acknowledges Helios's potential but notes it has not generated revenue and faces high risks. The article highlights projected $1.2 billion annual revenue at 90% margins starting in H1 2026, painting a rosy picture of future cash flows. However, the report emphasizes that earnings remain volatile from crypto cycles, the capital structure risks dilution, and data center success hinges on timely execution. Ultimately, while the news boosts the data center narrative, it doesn't change the fundamental uncertainties outlined in the deeper analysis.

Implication

The new article underscores Galaxy Digital's data center potential, suggesting substantial upside if contracts materialize as forecasted. However, the DeepValue report highlights that the company's earnings are highly sensitive to crypto volatility and lack steady free cash flow, with no current revenue from data centers. Key risks include potential dilution from $847.5 million in exchangeable notes and the possibility of delays in Helios's 2026 revenue start. If executed on time, the data center could improve earnings quality and support a re-rating, but until then, the investment case remains speculative. Thus, investors should monitor milestones closely rather than overreacting to bullish projections, maintaining a balanced view until concrete progress is demonstrated.

Thesis delta

The new article reinforces the data center segment's valuation potential, aligning with existing views on its long-term benefits. However, it does not mitigate the core risks of execution delays, crypto sensitivity, or capital structure complexities identified in the DeepValue report. Therefore, the HOLD/NEUTRAL thesis remains unchanged, with any upgrade contingent on verified revenue generation and risk reduction.