Galaxy Digital Exceeds Revenue Forecast for Q3, Shares Rise

Galaxy Digital Inc., a crypto-financial conglomerate founded and managed by billionaire Michael Novogratz, reported revenue and profit for the third quarter above expectations, with shares rising in pre-market trading.

Net income was $323 million, or 66 cents per share, which is about 36% lower than a year earlier. Revenue was $8.06 billion versus a forecast of $7.8 billion according to a Bloomberg analyst survey; the figure was higher a year earlier. Galaxy shares rose about 8% in pre-market trading.

The company benefited from entering the AI data center business: it continues to introduce new capacities under a contract with cloud provider CoreWeave. According to a statement on Tuesday, data centers brought in adjusted gross profit of $79 million and adjusted EBITDA of $69 million.

Pressure on shares

Galaxy is subject to significant fluctuations in both cryptocurrencies and the data center industry. It entered AI infrastructure with a multi-billion dollar contract with CoreWeave, under which it transfers mining assets to data centers for AI applications.

The prolonged downturn in the crypto market this year has hit the shares of public crypto companies: Galaxy's shares have fallen by about 30% since the beginning of the year. Another headwind is concerns about excessive spending on AI infrastructure: its main tenant CoreWeave faces growing skepticism due to weak demand for its debt.

Among the company's specific risks, BTIG's report names delays in capacity introduction, counterparty risks in high-performance computing, and falling cryptocurrency prices affecting collateral and the value of digital assets on the balance sheet. BTIG has a "buy" rating on Galaxy shares.