Digipower Technologies (NYSE American: DGXX)

1. Executive Summary

Digipower Technologies is approaching a binary valuation inflection expected in Q1 2026, driven by a transition away from legacy crypto infrastructure toward Tier-3 AI data-centre capacity.

Despite this transition, the market still values DGXX as a crypto miner, applying an EV/Revenue multiple of ~2×, versus Tier-3 AI data-centre peers averaging ~8×. This discount reflects uncertainty around execution and the absence of formal, binding customer contract disclosure.

If Digipower confirms its first Tier-3 AI customer contract (e.g., via an 8-K), the "prove-it" discount would likely compress rapidly and valuation frameworks would shift toward sector-appropriate multiples. Under that outcome, sensitivity analysis implies equity values from $4.14 (+58%) to $15.16 (+461%) per share, depending on contract size and applied multiple.

Until contract confirmation occurs, DGXX is likely to remain valued around ~$2.50/share (~$200m market cap)—a modest valuation versus management's targeted ~$566m 2026E net asset value and planned expansion toward ~$2bn by 2027.

This thesis is inherently event-driven and speculative, hinging on (1) near-term operational execution and (2) conversion of informal guidance into formal disclosure.

2. Investment Thesis

Overview: a binary re-rating setup

The critical premise is simple:

• DGXX is transitioning from legacy crypto infrastructure to Tier-3 AI data-centre capacity.
• The market still prices DGXX like a crypto miner (~2× EV/Revenue) rather than a Tier-3 AI infrastructure provider (~8× EV/Revenue average).
• The discount persists because the market cannot price forward utilisation without contractual certainty.

Key inflection point: If Digipower confirms its first Tier-3 AI customer contract, the market's uncertainty reduces materially and valuation logic should shift toward the Tier-3 AI framework.

Implied rerating range: A rerating implies equity values from $4.14 (+58%) to $15.16 (+461%) per share (see Valuation sensitivity table in Section 4).

Why the discount exists (and why it could vanish fast)

• Hyperscaler demand exceeds supply, but markets price contracts—not narratives.
• DGXX trades on legacy valuation logic until negotiations culminate in formal disclosure (e.g., 8-K).

Informal commentary supporting the Q1 contract setup

In a low-visibility (roughly 800 views) December 2025 interview, CEO Michel Amar stated:

"

We are sitting in a good position in a sense that we have now on the table four or five offers… I think this is our interest to make sure we pick the right customer with the right contract.

— Michel Amar (DGXX CEO), Dec 2025

This provides more specificity than prior press releases that referenced "customers" in abstract terms. It suggests the absence of a signed contract may reflect deliberate customer selection rather than weak demand.

"

It's up to us to pick and choose carefully what deal we're going to sign on a 10 year or 15 year deal because when you sign a 15 year deal or 10 year deal, you're kind of locked in for 10 or 15 years. So to make sure that we are getting the right deal is important number one because we are looking long-term and we don't need instant gratification.

— Michel Amar (DGXX CEO), Dec 2025

Tier-3 AI contracts typically run 10–15 years, fixing pricing over long durations. In a tightening infrastructure market, short delays can be economically rational if they secure materially better long-term terms.

Risk remains: the thesis is still conditional

Until informal guidance becomes formal disclosure, the market may continue applying a heavy risk-adjusted discount. Negotiations can extend, delay, or collapse—especially if operational milestones fail, most notably:

• Deployment/commissioning of the first Tier-3 ARMS 200 rack in January

The two assumptions this thesis requires

1. Near-term operational execution: Successful ARMS-200 commissioning in early January without material delays or performance issues.
2. Formal disclosure in the expected window: Management's qualitative commentary translates into binding contractual confirmation via formal channels (e.g., 8-K) within Q1 2026.

If either fails, downside risk increases and the current discount may be justified.

Why Q1 2026?

CEO suggests contract announcements are nearing:

"

I would say that it's imminent in the near future. We will start to announce contracts…

— Michel Amar (DGXX CEO), Dec 2025

Montgolfier view: contract confirmation is likely in Q1 2026, or at the latest early Q2 2026.

Operational framing:

• Testing for the first ARMS 200 system expected to complete in Q1 2026, going active toward month-end and ramping to 5MW by quarter-end.
• It is highly unusual for Tier-3 operators to begin first launch without a customer secured.

3. The Market & The Model

Surging market demand: "if there is supply, demand is near-guaranteed"

This thesis assumes Tier-3 AI data-centre demand remains structurally strong:

• In H1 2025, data-centre vacancy fell to 1.6% from 2.8% in H2 2024.
• AI's share of total data-centre power is expected to rise from 14% today to 27–30% by 2027.
• Overall shortfall estimated around ~10GW per year, supporting the conclusion:

If there is supply, demand is near-guaranteed.

ARMS 200: Digipower's differentiator

Digipower's approach is modular:

• Deploys in ~180 days vs typical 18–36 months construction cycles.
• Positioned to meet booming demand faster than traditional builds.

ARMS 200 is DigiPowerX's proprietary modular AI data-centre platform, Tier-3 certified. Each pod delivers 1MW of compute capacity, supporting up to 256 NVIDIA B200/B300 GPUs in high-density clusters.

Key technical risks (potentially lethal if they materialize)

• Extreme GPU density heat risk: 256 B200/B300 GPUs (1,000W+ TDP each) into 1MW modular pods using rack-scale Supermicro integration → increased hotspotting and cooling failure risk under sustained AI workloads.
• Rapid modular assembly risk: 180-day prefab deployment may reduce iterative commissioning time → risk of vibration damage to high-speed interconnects (e.g., InfiniBand) and cooling seals during transport/assembly.

Risk mitigants

• Tier-3 certification validates concurrent maintainability: Design certified such that localized failures should not cause full outages.
• SuperMicro high-performance liquid-cooling systems: Racks pre-tested for extreme density with claimed 90%+ heat rejection.

Bottom line: Large-scale ARMS 200 deployment remains unproven, but Tier-3 certification and SuperMicro's pre-tested liquid cooling provide reasonable confidence in near-term technical execution.

4. Valuation

Short-term valuation: what does a contract confirmation imply?

Assumptions used (explicitly speculative):

• Contract size: 40MW Tier-3 AI colocation (Hyperscalers often sign in 20–50MW tranches; White Fiber is used as a comp.)
• Pricing: $150/kW/month ≈ $1.8m per MW per year
• Contract term: 15 years
• Multiple: 8× forward EV/Revenue (conservative for smaller supplier; justified in peer section)

Implied steady-state revenue

40MW × $1.8m/MW/year = $72m annual revenue

EV/Revenue re-rating (8×)

$72m × 8 = $576m enterprise value

Equity value

$576m + $90m (net cash & assets) = $666m market cap (fair value)

Per share

$666m ÷ 65.3m shares ≈ $10.20/share (+257.9%)

Interpretation: A 40MW contract confirmation could revalue DGXX from ~$3.20 (legacy crypto lens) to ~$10.20 (Tier-3 AI lens).

Short-term sensitivity table

Using the same framework, valuation under different contract sizes and EV/Rev multiples:

Notes:

• 20–50MW is a realistic range for an initial Tier-3 AI contract.
• 5–10× EV/Revenue spans conservative to optimistic peer multiples.
• The highlighted cell (~$10.20) uses our base case assumptions.

Long-term valuation: MW buildout

Management has outlined a multi-year capacity ramp. The table below summarizes projected MW additions and implied Net Asset Value:

Note: These figures are based on management guidance and assume execution without material delays or capital constraints.

5. Peer Analysis

The following table compares Digipower to recent Tier-3 AI contract announcements and established players:

Key observation: Digipower currently trades at ~1.54× EV/Revenue versus peers at 8–22×. This discount reflects the absence of a confirmed contract, not a fundamental difference in business model.

6. Scenario Analysis

We assign probability-weighted outcomes:

Expected value: Probability-weighted share price ≈ $7.50–9.00/share, implying significant upside from current levels if base case materializes.

7. Key Risks

Execution risks

• ARMS 200 commissioning failure: Technical issues with first deployment could delay contract finalization and erode market confidence.
• Contract negotiation breakdown: Even with multiple offers, negotiations can collapse over terms, pricing, or exclusivity requirements.

Financial risks

• Dilution: Expansion capex may require equity raises at unfavorable prices if the stock remains depressed.
• ATM usage: The company has an at-the-market offering facility that could dilute existing shareholders.

Market risks

• AI capex cycle: A slowdown in hyperscaler AI infrastructure spending could reduce demand for Tier-3 capacity.
• Competition: Larger, better-capitalized operators could capture market share more aggressively.

8. Conclusion

Digipower Technologies presents a highly asymmetric risk/reward opportunity for investors willing to accept binary event risk. The current valuation reflects deep skepticism about execution, but the underlying demand environment for Tier-3 AI infrastructure is exceptionally strong.

If the thesis plays out: Contract confirmation in Q1 2026 could trigger a 3–5× rerating as the market reframes DGXX from crypto miner to AI infrastructure provider.

If it doesn't: Downside is significant but bounded—the company has assets, cash, and optionality that provide some floor value.

Montgolfier position: We are accumulating below $2.60 and targeting $10.00+ on successful contract confirmation.

Bibliography

• https://www.digipowerx.com/press-releases/c3jyrrdlxvd30uw7d9dehasb
• https://www.digipowerx.com/press-releases/s3khjnidh2kxfuusnjy2htbv
• https://www.digipowerx.com/press-releases/w2ooulqg5muwfys4xpo3sss4
• https://www.digipowerx.com/press-releases/oxdgsr8j9qcy7mhnq8zjacso
• https://www.digipowerx.com/press-releases/f08rdeooqt62t6hbxoci2uk0
• https://www.digipowerx.com/press-releases/gh4klaqi6yw8xvi6rvyu0e03
• https://www.digipowerx.com/press-releases/zcwj07k94lkap0i7r7o63uvs
• https://www.digipowerx.com/press-releases/fe7hjgnaqt51ovfijyo84m0v
• https://www.youtube.com/watch?v=R2wHHjK68XA&t=140s

About Montgolfier Research

Semper Sursum (Always Upward)

At Montgolfier Research, our mission is to uncover undervalued companies on the verge of transformative growth. Inspired by the pioneering spirit of the Montgolfier brothers—who soared when others stayed grounded—we conduct rigorous, in-depth research to spotlight hidden gems poised for major catalysts. By sharing our findings ahead of crucial market moments, we empower you with compelling information to explore new opportunities.

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