Galaxy Digital has received a bullish endorsement from Morgan Stanley, which sees significant upside for the company as it strengthens its dual focus on artificial intelligence and digital assets.

The investment bank initiated coverage of the stock with an overweight rating and a $42 price target, implying roughly 34% potential upside from Wednesday’s closing price.

The positive outlook reflects Galaxy’s position at the intersection of two of the fastest-growing industries, AI infrastructure and institutional cryptocurrency adoption.

However, on Thursday, Galaxy Digital stock was down 4% amid broader market downturn.

Morgan Stanley analyst James Faucette described Galaxy Digital as “a compelling combination” of a developing AI data center operator and a blockchain-enabled investment bank.

In a note to clients on Thursday, Faucette highlighted the company’s progress in building out its Helios data center, which is expected to become one of the largest high-performance computing (HPC) facilities in the world once fully operational.

The Helios campus, which is linked to CoreWeave’s AI cloud infrastructure, could generate an estimated $435 million in EBITDA by 2027, according to Morgan Stanley’s projections.

The note added that Helios could ultimately reach a terminal equity value of around $30 billion upon full build-out, underscoring its potential to become a cornerstone of Galaxy’s future growth strategy.

The AI sector has become an increasingly attractive area for investors, as demand for high-performance computing capacity surges across industries.

Galaxy’s expansion into AI data centers places it among a select group of financial and technology firms bridging traditional finance and next-generation computing infrastructure.

Beyond its AI ambitions, Morgan Stanley also sees Galaxy as a key player in the institutional blockchain ecosystem, benefiting from renewed momentum in digital asset adoption.

“Galaxy Digital Assets is levered to institutional blockchain adoption, a trend we view as nascent, enabled by the current political backdrop,” Faucette wrote.

The analyst noted that Galaxy has established itself as a pioneer in corporate and investment banking services, staking, custody, and asset management within the digital asset industry.

This diversified business model allows Galaxy to capture value from multiple facets of the evolving crypto economy, including institutional investment, decentralized finance (DeFi), and tokenized assets.

With regulatory clarity improving in several key markets, Morgan Stanley believes Galaxy is well positioned to expand its footprint as digital assets become more deeply integrated into mainstream finance.

Despite Thursday’s 4% intraday dip, Galaxy Digital shares remain up 66% year to date, reflecting robust investor enthusiasm for companies exposed to both crypto and AI themes.

The stock’s strong performance has been supported by a rebound in digital asset prices and growing optimism about AI infrastructure investment.

Morgan Stanley’s overweight rating suggests that the investment bank expects these tailwinds to continue driving Galaxy’s valuation higher in the coming quarters.

While execution risks remain, particularly around the build-out of the Helios data center and the volatility of crypto markets, analysts say the company’s diversified exposure and strategic positioning provide a solid foundation for long-term growth.

With Morgan Stanley’s endorsement, Galaxy Digital’s dual focus on AI-driven computing and institutional blockchain services could make it one of the more compelling hybrid plays in the technology and financial innovation space heading into 2026.

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