A Fresh Look at IREN (NasdaqGS:IREN) Valuation After Landmark Microsoft and Dell Cloud Deals

IREN (NasdaqGS:IREN) made headlines this week after signing massive deals with Microsoft and Dell, accelerating its transition from bitcoin mining into the AI cloud space. These agreements signal a major leap in IREN’s strategic direction.

See our latest analysis for IREN.

Investors have clearly noticed IREN’s transformation, with a 496% year-to-date share price return, one of the steepest climbs in the market, amplified by news of colossal deals and new revenue streams. Momentum is strong both in the short term and over the long haul: the company’s total shareholder return has exceeded 2,000% over the past three years, underscoring growing confidence around its pivot from crypto mining to specialized AI infrastructure.

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But after such an extraordinary run, the key question remains: is IREN still trading at an attractive valuation, or has the market already priced in the company’s AI-driven growth? Could there be more upside ahead, or is caution warranted?

Most Popular Narrative: 36.5% Undervalued

According to BlackGoat, the most widely followed narrative sets IREN's fair value at $98 per share, almost 60% above its recent $62 close. This aggressive upside is rooted in what the narrative sees as a dramatic transformation of IREN’s revenue drivers and underlying business model.

• Ambitious Plans to Expand Mining Capacity: IREN surpassed its H1 2024 growth target, reaching 10 EH/s more than a month ahead of schedule. The company now aims to achieve 20 EH/s by September 30, 2024, and 30 EH/s by the end of the year.

Read the complete narrative.

Want to know what’s fueling IREN’s big valuation upgrade? The standout thesis relies on aggressive operational targets and a revenue leap that few dare to predict. Get the inside scoop on which ambitious milestones and hidden numbers are behind this eye-popping price projection.

Result: Fair Value of $98 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, operational hiccups in executing large-scale AI infrastructure or unexpected cost overruns could undermine IREN’s bullish trajectory and test investor conviction.

Find out about the key risks to this IREN narrative.

Another View: Multiples Tell a Cautionary Tale

While the user narrative sees major upside, the market’s favored valuation tool tells a different story. Based on the sales ratio, IREN currently trades at 34.1x revenue, which is much higher than both the US Software industry average of 4.9x and peers at 26.5x. The ratio also stands well above the fair ratio of 18.6x, signaling that expectations are sky-high and pricing risk is elevated. Could this premium be justified, or is the stock in overvalued territory?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own IREN Narrative

If the current perspectives don't quite fit your outlook or if you have your own insights, it’s easy to dive into the data and shape your own conclusions in just a few minutes. Do it your way

A great starting point for your IREN research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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