IREN Just Passed Its Biggest AI Test as Microsoft and Nvidia Bet Billions

For months, the bears had a simple story on IREN (IREN). They saw it as a Bitcoin (BTCUSD) miner calling itself an artificial intelligence (AI) company, promising huge cloud contracts while delivering almost none of the revenue. Recent developments have made that argument much weaker.

IREN recently announced that Horizon 1, the first of four data centers it is building for Microsoft (MSFT), has been delivered and formally accepted. Microsoft had a five-day window to test the deployment against agreed standards, and once it signed off, IREN was cleared to start sending monthly invoices to Microsoft. This is the first revenue from a five-year $9.7 billion contract, not another promise about capacity to come.

The validation didn’t stop there. Nvidia (NVDA) tested the site running its GB300 systems and granted it Exemplar Cloud status. This is a certification reserved for providers that meet its performance and reliability bar. For a company that listed in 2021 as a Bitcoin miner, having Nvidia vouch for your AI infrastructure is massive. 

Why This Is Bigger Than It Looks

The context is what makes this interesting. The real question hanging over IREN was never demand, but whether it could keep funding a buildout that cost many times its revenue. Horizon 1 starts to answer that.

IREN already lined up a $3.65 billion debt package backed by the Microsoft deal, rated investment-grade. It covers almost all of the GPU spending tied to the contract. As I previously covered, IREN also holds a five-year $3.4 billion cloud deal with Nvidia, giving it a second large, contracted revenue stream. 

More than a quarter of IREN’s shares are still sold short. Much of that bet assumes the pivot won’t work, or that IREN will sink under its own debt and share dilution. The Microsoft and Nvidia deals are the company’s answer to these concerns. 

The AI business is still small next to Bitcoin mining today. But the company is starting to transition at a rapid pace. In its last quarterly release, IREN reported a sharp drop in Bitcoin revenue while AI cloud services revenue nearly doubled. The firm has now cleared its first major execution hurdle by securing the Microsoft deal. The next test comes on Aug. 27, when earnings should start to show whether all this capacity is turning into real money. 

About IREN Stock 

IREN operates large data centers powered mainly by renewable energy and used for Bitcoin mining, AI computing, and other high-performance computing applications. The company's large-scale, grid-connected facilities are purpose-built for the next generation of power-dense computing applications. The company was founded in 2018 and is headquartered in Sydney, Australia. 

Over the last 12 months, IREN stock has climbed 114%, easily outperforming the S&P 500 ($SPX), which has risen approximately 20% during the same period. The rally was driven by IREN’s emergence as a leading AI infrastructure provider. The company has secured multibillion-dollar contracts with major AI customers, rapidly expanded its AI cloud business, and raised its revenue targets as demand for AI computing capacity has continued to outpace supply. However, on a year-to-date (YTD) basis, the stock has gained 10%, marginally underperforming the S&P 500’s gain of 12% YTD. 

IREN’s valuation is hard to judge by the usual measures. The company isn’t consistently profitable yet as it absorbs the cost of its pivot, which means the forward price-to-earnings (P/E) ratio isn’t meaningful right now. The price-to-sales (P/S) ratio of 16.6 times has no historical average to compare against, because IREN has only recently started transitioning to being an AI firm rather than a Bitcoin miner. The P/S multiple is undoubtedly steep, but it reflects a business the market expects to look very different in a couple of years.

Earnings estimates are also unclear. Analysts aren’t sure of what the earnings trajectory will be in the next couple of years, although a sharp jump is expected later in the decade. That surge seems to be consistent with the firm’s AI cloud revenue expected to ramp.

The capital structure is where the real tension sits. IREN already had net debt of roughly $1.75 billion, and it has now arranged a further $3.65 billion in financing backed by the Microsoft contract. So, the numbers can’t settle this one. It’s a bet on execution, where delivering the Horizon facilities justifies today’s price, and any stumble leaves the debt as the real concern. 

IREN Grows AI Business as Bitcoin Fades

IREN reported third-quarter fiscal 2026 earnings on May 7. Total revenue of $144.8 million fell 22% from the previous quarter. Loss per share came in at $0.30, which fell short of the Wall Street consensus for a loss per share of $0.21. The quarterly results highlight IREN's ongoing transition from Bitcoin mining to AI cloud infrastructure services. While AI Cloud Services revenue surged 94% sequentially, overall revenue declined due to a significant drop in BTC mining revenue.

Looking forward, IREN maintains a positive outlook for AI cloud services despite the current quarter’s challenges. The firm expects revenue to increase, driven by strategic partnerships and expansion plans. However, a continued decline in BTC mining revenue could affect the company's overall financial performance. Management also highlighted that non-cash impairments and unrealized losses may persist, which will impact profitability.

What Do Analysts Expect for IREN Stock?

Bernstein analyst Gautam Chhugani recently reiterated a “Buy” rating on IREN stock and assigned a price target of $100, reflecting impressive potential upside of 135% from current levels. In contrast, Needham analyst John Todaro maintained a “Hold” rating. This shows that Wall Street remains divided on IREN. However, following the company’s Q4 results set to be announced on Aug. 27, analysts will update their financial models and likely issue new price targets. 

Based on 15 Wall Street analysts with coverage, IREN stock holds a consensus “Moderate Buy” rating. Out of those analysts, 11 have a “Strong Buy” rating, three have a “Hold” rating, and one has a “Strong Sell” rating. The mean price target of $78.64 implies potential upside of 85% from current levels, reflecting strong confidence in IREN’s long-term growth prospects.