The Undervalued AI Data Center Play Within Galaxy Digital: Strategic Infrastructure Ownership and Regulatory Moats in a High-Growth Sector

The intersection of artificial intelligence (AI) and digital infrastructure has emerged as one of the most compelling investment frontiers in 2025. At the vanguard of this convergence is Galaxy Digital Holdings, a company increasingly positioned as a hybrid of a blockchain-enabled investment bank and an AI data center developer. While its digital assets division has garnered attention, the company's underappreciated AI infrastructure holdings-particularly its high-performance computing (HPC) data center campus-present a compelling case for undervaluation. With regulatory tailwinds, strategic partnerships, and a capital-efficient expansion strategy, Galaxy Digital is poised to capitalize on the surging demand for AI infrastructure, even as its current financial metrics suggest the market has yet to fully price in its long-term potential.

Strategic Infrastructure Ownership: A Foundation for AI Growth

Galaxy Digital's core strength lies in its ownership of a single-campus data center with a total approved capacity of 800 megawatts (MW), designed to support cutting-edge AI and HPC workloads. This infrastructure, located in a region with access to low-cost, renewable energy, positions the company to meet the escalating demand for reliable computing power from AI developers and cloud providers. According to Q3 2025 financial results, Galaxy reported $2.7 million in Data Centers Adjusted Gross Profit, underscoring the nascent monetization of this asset.

The 800MW campus is not merely a static asset but a scalable platform for future expansion. Analysts at Morgan Stanley highlight that Galaxy's base case scenario includes an 80-95% probability of securing an additional 800MW in power approvals, with a 35% chance of obtaining 1.9 gigawatts (GW) of capacity under study according to Morgan Stanley's analysis. Such approvals would transform the campus into one of the largest HPC facilities globally, capable of hosting AI workloads with the efficiency and scale required to compete with traditional hyperscalers. This strategic ownership of power and land creates a durable moat, as replicating such infrastructure would require significant capital and regulatory hurdles for competitors.

Regulatory Moats: A Tailwind for Expansion

Galaxy Digital's regulatory positioning further strengthens its competitive edge. The company's ability to secure incremental power approvals is critical to its growth trajectory. Morgan Stanley's analysis suggests that the 90% probability of an 800MW approval and the 35% chance for 1.9GW of additional capacity are already factored into its valuation model. These approvals, if realized, would not only expand Galaxy's infrastructure footprint but also align with broader industry trends, as competitors like CleanSpark and TeraWulf have similarly turned to debt markets to fund expansion according to Coindesk reporting.

The regulatory environment for AI data centers remains favorable, with governments incentivizing investments in clean energy and advanced computing. Galaxy's existing power portfolio and its alignment with renewable energy sources position it to benefit from these policies, reducing the risk of future regulatory headwinds. This combination of strategic infrastructure ownership and regulatory tailwinds creates a compounding effect, where each approval accelerates the company's ability to attract AI tenants and generate recurring revenue.

Strategic Partnerships and Ecosystem Synergies

Beyond infrastructure, Galaxy Digital's partnerships with AI and blockchain players amplify its value proposition. The company's Helios data center is projected to support a CoreWeave-linked AI cloud computing segment, which could generate $435 million in EBITDA by 2027. This collaboration leverages CoreWeave's expertise in AI cloud services, while Galaxy provides the physical infrastructure and power infrastructure needed to scale operations. Such partnerships are critical in a sector where demand for AI compute is outpacing supply, creating a bottleneck that Galaxy is uniquely positioned to address.

In the blockchain space, Galaxy's Digital Assets division is also gaining traction. The company's recent withdrawal of 7,098 ETH from Binance-bringing total withdrawals in the past month to over 14,000 ETH-signals a strategic shift toward self-custody and institutional-grade asset management. This move aligns with growing institutional adoption of digital assets, a trend that could further diversify Galaxy's revenue streams. Additionally, Galaxy's role as an institutional backer of BitMine, a firm pursuing a 5% stake in the Ethereum network, underscores its influence in shaping the future of crypto infrastructure.

Valuation Discrepancy: A Case for Undervaluation

Despite these strengths, Galaxy's current valuation appears to understate its long-term potential. The company's Net Profit Margin has declined sharply-from 22.86% to 4.35%-while its Future P/E ratio has surged to 241.46x, reflecting lower near-term profitability compared to future earnings expectations. This discrepancy suggests that the market is discounting Galaxy's AI infrastructure growth at a premium, while its digital assets division remains undervalued.

However, this valuation gap may present an opportunity. Morgan Stanley's $42 price target and Overweight rating imply a 50% upside from current levels, factoring in the company's dual exposure to AI and crypto. Rosenblatt Securities has similarly noted that Galaxy's digital assets franchise is "underappreciated," with significant upside potential as institutional demand for blockchain services accelerates according to financial analysis.

Conclusion: A Dual-Engine Growth Story

Galaxy Digital's AI data center play is not just about infrastructure-it's about owning the physical and regulatory assets that underpin the next wave of technological innovation. By combining strategic infrastructure ownership, favorable regulatory prospects, and ecosystem partnerships, the company is building a platform that can scale with the AI revolution. While its current financials may appear lackluster, the long-term value of its assets and the high probability of regulatory approvals suggest the market has yet to fully price in its potential. For investors seeking exposure to a high-growth sector with durable competitive advantages, Galaxy Digital offers a compelling case of undervaluation.