Results and market reaction
Galaxy Digital, the crypto finance group founded and led by billionaire Michael Novogratz, said third quarter revenue and earnings outpaced expectations. Profit totaled $323 million, translating to 66 cents per share, which was down roughly 36% from the prior-year quarter.
Sales reached $8.06 billion, ahead of the $7.8 billion consensus from Bloomberg's analyst survey and below the year-ago period. Shares rose about 8% in pre-market trading after the update.
AI data-center push and CoreWeave tie-up
The company said results benefited from its move into artificial intelligence infrastructure, where it is bringing additional data-center capacity online to meet its agreement with CoreWeave Inc. Those facilities generated $79 million in adjusted gross profit and $69 million in adjusted EBITDA, according to a Tuesday statement.
Galaxy has a multi-billion dollar agreement with CoreWeave under which it plans to repurpose its Bitcoin mining footprint into data centers that back AI applications. That expansion also means the business now rides the ups and downs of both crypto and data-center markets.
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Risks and what it means for your portfolio
This year's crypto slump has hit publicly traded crypto firms, and Galaxy's mix of trading, asset management and brokerage has not been spared. The stock is down about 30% year to date. Another overhang is spending on AI infrastructure, especially as key tenant CoreWeave faces more skepticism amid waning demand for its debt.
BTIG flagged company-specific risks that include slower-than-expected energization of operations, counterparty exposure tied to high performance computing, and declines in crypto prices that could push down the balance-sheet carrying values of collateral and digital assets. BTIG maintains a buy rating on the shares.
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