Galaxy Digital's (GLXY) stock surges on its 'multi-engine growth model'

When Citizens JPM initiated coverage of Galaxy Digital (GLXY) on Tuesday with a Market Outperform rating, the firm's analysts cited confidence that the company is in position "to capture outsized share in two transformative markets."

Those two markets happen to be artificial intelligence and cryptocurrencies.

With its digital asset platform, Galaxy offers institutional trading, advisory, asset management, staking, self-custody, and tokenization.

Meanwhile, the company also offers data-center infrastructure to power AI and high-performance computing (HPC) workloads at its 800 MW Helios campus in Texas.

Citizens analysts, led by Devin Ryan, wrote in their client note that Galaxy has "dual exposure to two secular megatrends–digital asset institutionalization and AI-driven infrastructure, creating a powerful multi-engine growth model."

Ryan placed a $60 price target on the stock, representing a roughly 130% increase over its share price at the time of the writing.

Galaxy's stock surged 12.9% on Tuesday, pushing it up 25.3% for the year.

Although the cryptocurrency market has been experiencing an extended slump, there are two main factors that make the current downturn different than the so-called "crypto winter" of 2022, when bitcoin plunged 60% and the digital asset space lost about $2 trillion in total assets.

For one, there is a much more favorable regulatory environment, especially in the United States, than there was three years ago.

This heightened clarity over the regulation of digital assets has led to the second factor that makes this current slump less ominous, which is the fact that there is substantially higher institutional adoption than there was back then.

As large sums of institutional money has poured into cryptocurrencies, it provides the market with a level of security and liquidity that was missing in 2022.

And it's the institutional segment that Galaxy targets with its digital asset platform, something it has been building out further in the last couple of months.

In October, the company integrated with Coinbase Prime (COIN), the crypto giant's institutional brokerage, giving Prime clients seamless access to Galaxy's high-performance staking structure.

Galaxy is on the "short list" that Coinbase has integrated directly onto its Prime platform.

The company further expanded its institutional staking offerings last week when it acquired Alluvial Finance, a staking software development firm.

The acquisition makes Galaxy the development company for Liquid Collective, the leading enterprise-grade liquid staking protocol.

Alluvial Finance had previously served as the development company for the Liquid Collective.

Galaxy noted in a press release that liquid staking has become a rapidly growing part of the digital assets space because it offers "staking rewards while keeping staked assets liquid and usable across decentralized finance (DeFi) applications."

The US Security and Exchange Commission (SEC) said in August that certain forms of liquid staking falls outside of securities laws, which created a path for institutional adoption.

Morgan Stanley analysts, led by James Faucette, initiated coverage of Galaxy last month with an Overweight.

Similar to Citizens' analysts, Faucette pointed to the company's "multi-pronged growth drivers," calling Galaxy both "a blockchain-enabled investment bank" and "a nascent AI data center developer with a clear path to monetizing one of the largest single-campus HPC data centers under development."