Galaxy Digital's Strategic Transformation: From Crypto Volatility to Recurring Infrastructure Revenue

Galaxy Digital (GLXY) is undergoing a dramatic shift from a crypto-native financial services platform to a diversified infrastructure and institutional services company. This transformation, driven by a dual-engine business model, positions the firm to hedge against the volatility of digital assets while capitalizing on the explosive demand for AI-driven computing infrastructure. The result is an asymmetric risk/reward profile that suggests the stock is significantly undervalued relative to its long-term potential.

The Dual-Engine Model: Crypto Services and AI Infrastructure

Galaxy's business is split into two segments: Digital Assets and Data Centers. The Digital Assets segment includes institutional trading, asset management, staking, and custody services, which generated $318 million in adjusted gross profit in Q3 2025, up from $295 million in the prior quarter. This growth reflects strong institutional adoption of crypto services, with assets under management and staking reaching $15 billion according to the latest company report. However, this segment remains exposed to crypto market cycles, which can introduce earnings volatility.

The Data Center segment, by contrast, is designed to provide stable, recurring revenue. Galaxy's Helios Data Center Campus in Texas, now transitioning from mining to AI compute infrastructure, has secured a 15-year contract with CoreWeave for 800 MW of power capacity. This partnership is projected to generate over $1 billion in annual revenue once fully operational in 2026. The campus is also expanding with an additional 2,700 MW under study, supported by a $1.4 billion project financing facility as reported in Q3 earnings. Crucially, this infrastructure is positioned to meet a looming U.S. data center supply shortfall, with demand expected to grow to 80 gigawatts by 2030 according to industry analysis.

Valuation Mispricing: SOTP vs. Market Cap

Galaxy's current valuation appears to underprice its dual-engine model. A Sum-of-the-Parts (SOTP) analysis estimates the company's total enterprise value at $15.8 billion, with $7.7 billion attributed to its digital-asset services and $8.1 billion to its AI compute infrastructure according to Mint Ventures research. Yet, as of November 2025, Galaxy trades at a $10.1 billion market cap-a 48% discount to its SOTP valuation. This gap suggests the market is underappreciating the long-term value of the data center segment, which is still in its early revenue-generating phase.

Citizens, a recent analyst firm to initiate coverage on Galaxy, has assigned a $60 price target (130% upside from current levels) using a SOTP framework. The firm values the Digital Assets segment at $25 per share and the Data Center business at over $35 per share according to their analyst report. These figures align with industry trends: hyperscalers are projected to spend $350 billion on data center capital expenditures in 2025 alone, and Galaxy's Texas campus is uniquely positioned to capture a significant share of this demand.

Asymmetric Risk/Reward: Crypto Volatility vs. Infrastructure Stability

The dual-engine model creates a compelling risk/reward asymmetry. On the downside, the Digital Assets segment remains vulnerable to crypto market corrections. For example, a sharp decline in institutional trading volumes or staking yields could pressure short-term earnings. However, the Data Center segment acts as a stabilizer. Once operational, its 15-year contract with CoreWeave ensures predictable cash flows, reducing reliance on crypto cycles according to Q3 earnings data.

On the upside, the data center's potential to scale beyond its initial 800 MW capacity-targeting 3.5 gigawatts by 2028-could unlock additional value as AI demand surges according to company projections. Meanwhile, the Digital Assets segment's Q3 performance (358% YoY growth in adjusted gross profit) demonstrates resilience even in turbulent markets as reported in the earnings call. This duality-high-growth crypto services paired with low-volatility infrastructure-creates a unique opportunity for investors seeking exposure to both Web3 and AI without full exposure to either's risks.

Execution Risks and Market Realism

Critics may question whether Galaxy can execute its data center expansion on time and within budget. The Helios campus is still in its early revenue phase, and delays in infrastructure development could push out cash flows. Additionally, the crypto segment's dependence on market conditions remains a wildcard. However, the company's $3.2 billion in equity capital and a $460 million investment from a top-tier asset manager as disclosed in the Q3 earnings provide a strong balance sheet to weather near-term volatility.

The key risk lies in the timing mismatch between capital deployment and revenue recognition. Galaxy has already spent $1.4 billion on project financing, but meaningful revenue from the data center won't materialize until 2026 according to Q3 financial disclosures. This lag could test investor patience, especially if crypto markets correct before the infrastructure segment gains traction. Yet, given the long-term secular trends in AI and institutional crypto adoption, this delay appears manageable.

Conclusion: A Mispriced Multi-Engine Play

Galaxy Digital's dual-engine model is a rare combination of high-growth crypto services and stable infrastructure revenue. The current valuation discount to SOTP suggests the market is underestimating the data center's long-term potential and the Digital Assets segment's resilience. With a 130% upside target from Citizens and a strategic pivot into AI infrastructure, Galaxy offers an asymmetric risk/reward profile that could appeal to investors seeking exposure to two of the most transformative industries of the decade.

As the Helios campus ramps up in 2026 and crypto markets stabilize, the gap between Galaxy's current valuation and its intrinsic value is likely to narrow-potentially delivering outsized returns for early adopters.