Galaxy Positioned to Capture Favorable Regulatory Upside, Jefferies Says as It Initiates With Buy

Galaxy Digital (GLXY) is well positioned to capture upside from the favorable regulatory backdrop for cryptocurrency, Jefferies said in a new research report.

Jefferies has initiated coverage of the crypto investment bank with a buy rating, citing the passage of the GENIUS Act in the U.S. as "providing favorable market structure," for Galaxy's business.

The research on Tuesday also highlighted Galaxy's potential for profiting from the growing demand for artificial intelligence (AI) data centers. Jefferies referred to Galaxy's lease of CoreWeave's 393 MW site at Helios, West Texas as "a transformational deal."

Jefferies assigned Galaxy a buy rating and a $35 price target. GLXY shares closed over 6% higher at $29.11 on Tuesday. They were up a further 3% at $30 in pre-market trading on Wednesday.

The Mike Novogratz-founded firm is a digital assets financial services firm providing trading, asset management and investment banking. However, Jefferies believes approximately two thirds of its value stems from its data center business.

The bitcoin BTC$89,488.31 mining industry has been pivoting to AI data to cash in on the proliferation of the sector and to diversify their revenue streams amidst more challenging conditions for BTC mining.

AI data centers and bitcoin mining facilities have numerous similarities in terms of the required hardware and expertise in high-performance computing (HPC), thus it can prove a natural expansion for miners.