IREN (IREN) Is Down 9.3% After Massive Convertible And Equity Raise To Pivot Into AI

• In recent days, IREN Limited completed a US$2.00 billion private offering of low‑coupon convertible senior notes due 2032 and 2033 and a roughly US$1.63 billion registered direct equity sale, using the proceeds to repurchase existing 2029 and 2030 convertible notes, fund capped call transactions, and support general corporate purposes.
• This funding move, coming shortly after IREN’s US$9.70 billion, five‑year AI cloud services agreement with Microsoft, marks a clear shift from balance‑sheet‑heavy Bitcoin mining toward contract-backed AI infrastructure that could materially reshape the company’s revenue mix and risk profile.
• Next, we’ll examine how this large convertible-and-equity financing tied to Microsoft’s AI deal may reshape IREN’s investment narrative.

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IREN Investment Narrative Recap

To own IREN today, you need to believe the pivot from balance sheet intensive Bitcoin mining to long term, contract backed AI infrastructure can scale fast enough to justify the recent US$3.6 billion funding. The new low coupon convertibles and equity raise directly support the Microsoft AI build out, but they also sharpen the near term focus on execution risk around AI ramp up and on dilution as the key overhangs for the stock.

The most relevant recent announcement alongside this financing is the US$9.70 billion, five year AI cloud services agreement with Microsoft, which underpins IREN’s shift toward recurring AI revenue and underlies much of the justification for levering up today. The size and visibility of that contract sit at the center of the bull case, while the aggressive GPU and data center rollout it requires sits at the center of the bear case if capital spending or timelines slip.

Yet investors should be aware that if heavy AI capex continues to outpace operating cash flow, the combination of leverage and...

Read the full narrative on IREN (it's free!)

IREN's narrative projects $1.5 billion revenue and $1.0 billion earnings by 2028. This requires 45.6% yearly revenue growth and an earnings increase of about $913 million from $86.9 million today.

Uncover how IREN's forecasts yield a $81.38 fair value, a 85% upside to its current price.

Exploring Other Perspectives

Twenty fair value estimates from the Simply Wall St Community span roughly US$12 to US$108 per share, showing just how far apart views on IREN can be. When you set that range against the company’s heavy, debt funded AI data center build, it underlines why you may want to compare several different risk and growth assumptions before forming your own view.

Explore 20 other fair value estimates on IREN - why the stock might be worth less than half the current price!

Build Your Own IREN Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your IREN research is our analysis highlighting 4 key rewards and 4 important warning signs that could impact your investment decision.
• Our free IREN research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate IREN's overall financial health at a glance.

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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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