Digi Power X Inc. (DGXX) saw its shares climb nearly 13% on Tuesday, closing at $8.39, and trading near $9 in early premarket Wednesday. The rally comes on the heels of a transformative 10-year, $1.1 billion AI data-center agreement with Cerebras Systems, with the potential value reaching up to $2.5 billion if all renewal options are exercised. Investors are now focused on the company's upcoming Q1 earnings report and operational update scheduled for Friday, May 15.
Market Context and Investor Sentiment
The surge in DGXX shares reflects a broader market bet on the company's strategic pivot from cryptocurrency mining to AI infrastructure. The stock has posted three consecutive regular-session gains, rising from $6.63 on May 8 to $8.39 by May 12. Trading volume spiked to nearly 21 million shares on Tuesday, signaling heightened interest. Since closing at $3.76 on May 1, the stock has surged over 120%, driven by both fundamental developments and momentum.
Bulls view Digi Power X as a nimble player carving out a niche in AI infrastructure, while bears caution about construction risks, the steep price climb, and potential dilution from an at-the-market equity program capped at $175 million. The company's cash position of $78.5 million and zero debt provide some cushion, but the real test lies in execution.
The Cerebras Deal and AI Pivot
The Cerebras Systems deal, announced last week, is a cornerstone of Digi Power X's AI strategy. It involves a purpose-built, 40-megawatt AI data center campus in Columbiana, Alabama, with initial revenue expected to flow in late 2026 and full deployment by Q1 2027. The company aims to have Phase 1 ready for service by December 15, 2026, with construction self-funded. CEO Michel Amar called the agreement 'transformational,' stating, 'We are no longer building toward the top tier of this industry. We are in it.'
Near-term revenue hinges on a 24-month bare-metal GPU rental deal with SubQ AI, valued at approximately $19.6 million, with about $2.95 million due upfront. The contract begins on May 15, coinciding with the earnings update, adding urgency to the narrative. Digi Power X has secured around 400 megawatts of power at sites in Alabama, New York, and North Carolina, a critical resource for AI infrastructure.
Financials and Risks
For fiscal 2025, Digi Power X reported total revenue of $34.2 million, with $78.5 million in cash and $14.8 million in digital currency. The company's at-the-market equity program, authorized on May 8, allows sales of up to $175 million in subordinate voting shares, raising dilution concerns. Execution risk is significant, as the company enters a capital-intensive AI data center cycle. Peers like IREN have partnered with Nvidia for up to 5 gigawatts of AI infrastructure, while CoreWeave posted Q1 revenue of $2.08 billion but a net loss of $740 million. Applied Digital recently secured a $300 million bridge loan for its North Dakota data center.
A recent filing revealed that Citadel-linked entities hold a 4.9% beneficial stake in DGXX, though the filing states no activist intentions. This adds a layer of market-structure intrigue but does not signal immediate bullishness.
Outlook
Friday's Q1 update will be pivotal. Investors seek concrete evidence of construction progress, customer commitments, and a funding plan that minimizes dilution. The market is increasingly treating DGXX as an AI infrastructure play, but the bar is high. The company must demonstrate that its AI contracts translate into real, funded revenue.
