Hook & thesis
IREN’s recent 10-20% selloff after a disappointing Q2 print is a classic example of headline fear overwhelming long-term fundamentals. Yes, revenue missed and the company reported a quarterly net loss, but the market is under-pricing three concrete bullish facts: (1) management has secured a $3.6 billion credit facility at under 6% to fund the pivot to AI infrastructure, (2) a $9.7 billion Microsoft contract provides a demand anchor for GPU capacity, and (3) 4.5GW of secured power plus the Sweetwater site coming online in April 2026 substantially increases addressable recurring revenue.
I think the stock reaction is overdone and presents a buying opportunity. I am initiating an aggressive long with an exact entry at $42.50, a strict stop at $36.50, and a target of $65.00 over a long-term horizon (180 trading days). This trade is tactical: we’re buying a de-risked capacity ramp and anchored demand at an attractive price relative to the company’s optionality.
What IREN does and why the market should care
IREN is a vertically integrated data center operator focused on power-dense computing for Bitcoin mining historically, and increasingly for AI infrastructure. The company operates in renewable-rich, fiber-connected regions across the U.S. and Canada. The business matters because AI customers (hyperscalers and large cloud providers) need purpose-built, grid-connected facilities with reliable, cheap power and fast fiber — precisely IREN’s pitch.
Why should investors care now? The company has publicly stated a pivot to AI, and the Microsoft contract provides a clear sales pipeline for GPU capacity purchases. Management is targeting $3.4 billion in annualized recurring revenue by the end of 2026, a non-trivial milestone that would materially change cash flow prospects versus a pure crypto-mining mix that swings with Bitcoin prices.
Key facts and recent performance
- Market cap is about $13.7 billion and enterprise value roughly $14.46 billion.
- Recent quarterly sales were reported at $184.69 million versus the consensus $228.13 million, and the quarter included a $155.4 million net loss driven by Bitcoin headwinds and higher mining difficulty.
- Management secured a $3.6 billion credit facility at under 6% interest to fund the AI transition and has 95% of financing secured for GPUs tied to the Microsoft deal.
- IREN reports 4.5GW of secured power capacity and expects the Sweetwater facility to come online in April 2026; management’s target is $3.4 billion ARR by the end of 2026.
- Free cash flow is currently negative (about -$1.197 billion), reflecting heavy capex and conversion costs for the pivot; cash per share metrics and leverage show the company is investment-stage in the transition.
Valuation framing
At a market cap near $13.7 billion and enterprise value of about $14.46 billion, the stock is priced for either rapid execution to AI-scale or continued pain from crypto sensitivity. The stock has traded as high as $76.87 in the past 52 weeks and as low as $5.13 — a wide band that reflects binary outcomes. If management hits the $3.4 billion ARR target and converts a material portion into long-term data center leases or contracted GPU consumption, a multiple re-rating toward peer AI-infrastructure valuations is reasonable. Even conservatively, converting a meaningful fraction of that ARR into contracted revenue would materially improve EV/ARR and push the share price well north of current levels.
Yes, current GAAP metrics look ugly (quarterly loss and negative free cash flow). But the most important valuation inputs for infrastructure builders are (1) contracted future revenue, (2) power and connectivity advantages, and (3) financing access. All three boxes are checked: IREN has an anchor $9.7 billion contract, secured power capacity, and a sizable low-cost line of credit.
Trade plan (actionable)
- Action: Initiate long position.
- Entry price: $42.50.
- Stop loss: $36.50 (breach signals either a failed technical support at the week’s low or renewed conviction shock in funding/backlog).
- Target price: $65.00.
- Horizon: Long term (180 trading days). I expect the timeframe to allow the market to digest incremental evidence: Sweetwater commissioning (April 2026), GPU installation pacing, and early revenue recognition under the Microsoft arrangement.
Rationale for levels: $36.50 sits just below the recent intra-day low near $36.52 and represents a mechanical invalidation point for the bullish narrative. $65 is achievable if the market gives a multiple to the company as recurring AI demand and contracted revenue become visible — it implies a re-rating but not a heroic stretch given the $3.4B ARR target and the company’s optionality.
Catalysts to drive the trade
- Sweetwater commissioning in April 2026 - visible ramp to capacity and early revenue should be reported after commissioning.
- Progress updates on GPU deliveries and installation under the Microsoft contract; confirmation of sustained GPU utilization would help convert backlog to revenue.
- Quarterly updates showing reductions in crypto-mining revenue share and increases in contracted AI revenue; movement toward the $3.4B ARR target.
- Further debt or equity financing on favorable terms that extends runway without heavy dilution.
Technical considerations
Technicals are mixed: momentum indicators like MACD show bearish pressure and the 10-day and 20-day SMAs sit above current prices (10-day SMA ~ $52.29). RSI is sub-50 at ~40.8, signaling room for consolidation. That said, the current buy is a value/conviction trade rather than a pure momentum play; we are using a tight stop to limit drawdown if technical weakness persists.
Risks and counterarguments
There are clear reasons this stock can stay depressed or move lower, and I want to be explicit:
- Execution risk: Converting a $9.7B head contract and 4.5GW capacity into stable ARR requires flawless execution. Delays in Sweetwater commissioning, GPU buildouts, or supply-chain snags could push revenue recognition and keep losses high.
- Crypto hangover: Bitcoin-linked revenue still influences topline in the near term. If Bitcoin falls further or mining economics deteriorate, reported revenue and margins may remain volatile.
- Balance sheet & cash burn: Free cash flow is negative (about -$1.197 billion). While the $3.6B facility covers near-term needs, further capex or slower revenue ramp could require more dilutive financing.
- Market sentiment and multiples: The stock has been bid up and down dramatically; investor sentiment can stay punitive even with improving fundamentals, leaving the share price rangebound for months.
- Macro/AI spend cutbacks: If hyperscalers pull back on AI capex unexpectedly, demand for external capacity could slow and the Microsoft relationship may not scale as assumed.
Counterargument: The most persuasive bear case is that IREN simply cannot turn the anchor Microsoft deal into stable, high-margin recurring revenue quickly enough, leaving it in a prolonged cash-burn phase that erodes valuation despite big headlines. That’s why I am strict about the stop at $36.50 — if the market revisits that low on deteriorating operational news, the risk-reward is no longer attractive.
What would change my mind
I will reevaluate my bullish stance if any of the following occur:
- Evidence of a meaningful delay in Sweetwater’s commissioning beyond April 2026 without credible new timelines.
- Material downgrade or public revision of the Microsoft deal terms (less GPU commitment, extended delivery, or contingent clauses that weaken guaranteed demand).
- New financing that is clearly dilutive at unfavorable terms or indicates the company cannot access the $3.6B facility as expected.
Conclusion
IREN’s selloff is driven by short-term misses and profit-taking, but the underlying structural story is intact: large contracted demand, secured power capacity, and low-cost financing dramatically lower the probability of a pure downside outcome. I’m taking an aggressive, but disciplined, long position at $42.50 with a $36.50 stop and a $65 target over 180 trading days. The position size should reflect the trade’s high-risk profile — treat this as a high-conviction, event-driven trade rather than a passive buy-and-hold. If the company shows the expected execution on Sweetwater and GPU installations while beginning to demonstrably convert contracted demand into recurring revenue, the market should re-rate the stock higher from here.