IREN: Surging AI Cloud Demand And Major Contracts Will Drive Re-Rating

IREN's analyst price target has been significantly raised from $62.75 to $74.17. Analysts cite accelerating AI cloud business momentum, new strategic partnerships, and increased sector confidence as key drivers for the more optimistic outlook.

Analyst Commentary

Analysts have issued a wide range of commentary following IREN’s recent results and strategic announcements, reflecting both increased optimism and ongoing caution about the company’s outlook in the competitive AI cloud sector.

• Bullish analysts have significantly raised their price targets, in some cases more than doubling previous estimates. They cite IREN’s expanding AI cloud business and strong demand for high-performance computing infrastructure as key factors.
• Recent partnerships with major technology companies and new data center deals are viewed as lending credibility to IREN’s growth narrative and establishing the company as a credible hyperscaler partner.
• Analysts note IREN’s focus on building its own vertically integrated AI cloud business, rather than relying solely on co-location models, as supporting higher capital expenditure and long-term value creation.
• There is a belief among optimists that IREN’s extensive access to power, land, and data center expertise positions it uniquely to benefit as demand for AI infrastructure continues to escalate.

• Bearish analysts remain cautious about IREN’s ambitious revenue guidance. They highlight high execution and financing risks as the company ramps up its AI cloud activities.
• Concerns have been raised about potential volatility in client demand, particularly for white-label services, and the risk that current supply-side advantages could erode in a competitive market.
• There is skepticism regarding IREN’s ability to deliver on large-scale AI data center projects, given the capital-intensive nature of the business and increasing competition from better-established hyperscalers and neocloud leaders.
• Some analysts note that while IREN’s shares have experienced significant gains, the company still trades at a discount to its peer group on key metrics, and closing this gap will require sustained performance and successful expansion.

What's in the News

• IREN signed a multi-year GPU cloud services contract with Microsoft, providing access to NVIDIA GB300 GPUs over five years for approximately $9.7 billion, including a 20% prepayment. GPU deployments will take place at the Childress, Texas campus, supported by new data centers and funded via existing cash, customer prepayments, and additional financing. (Key Developments)
• The company announced additional multi-year cloud services contracts with leading AI companies for NVIDIA Blackwell GPU deployments and expects to surpass $500 million in annualized run-rate revenue from 23,000 GPUs by the end of Q1 2026. (Key Developments)
• IREN completed a follow-on equity offering totaling nearly $1 billion, issuing over 66 million ordinary shares through at-the-market transactions. (Key Developments)
• IREN expanded its AI Cloud capacity to 23,000 GPUs after purchasing 12,400 new units, including AMD MI350Xs and NVIDIA Blackwell GPUs, to meet growing demand and further diversify its hardware offerings. (Key Developments)
• Anthony Lewis was appointed Chief Financial Officer, transitioning from Chief Capital Officer and succeeding Belinda Nucifora, who is departing after 3.5 years as CFO. (Key Developments)

Valuation Changes

• Consensus Analyst Price Target has increased from $62.75 to $74.17, reflecting higher market optimism regarding IREN’s growth prospects.
• Discount Rate has risen slightly from 8.08% to 8.11%, indicating a marginally higher risk premium applied to future cash flows.
• Revenue Growth projections have climbed notably from 62.74% to 72.60%, suggesting stronger expected top-line expansion.
• Net Profit Margin is now forecast to fall significantly from 27.18% to 11.27%. This points to expectations of tighter profitability, potentially due to increased investments and competition.
• Future P/E ratio has surged from 44.94x to 74.40x. This implies a higher valuation multiple based on anticipated future earnings.