As the demand for artificial intelligence (AI) infrastructure surges, cloud infrastructure services are gaining popularity, particularly in the realm of neocloud offerings. Over the last few years, companies specializing in chip design and cloud computing have emerged as significant beneficiaries of the ongoing AI revolution. Hyperscalers are actively pursuing graphics processing units (GPUs) to expand their data center capabilities, leading to the rise of a new segment within AI: infrastructure services.
Neocloud services, which allow businesses to rent GPU access through cloud-based solutions, have particularly soared in popularity in 2025. Leading providers in this field include CoreWeave, Oracle, and Nebius Group, however, a new contender has captured attention: Iren (IREN), which has seen an impressive stock increase of 14.68% recently.
Iren’s origins can be traced back to cryptocurrency, where it focused on Bitcoin mining, creating extensive data center operations equipped with specialized hardware. Recognizing the growing demand for AI computing, Iren transitioned towards a neocloud model, offering businesses the chance to rent GPU capacity and bypass the challenges associated with building their own infrastructure.
In the backdrop of this evolution, tech giant Microsoft has invested tens of billions of dollars in supporting its Azure cloud platform, largely through strategic partnerships with firms like OpenAI and investments in new data centers. Recently, Microsoft has expanded its infrastructure-as-a-service (IaaS) offerings, signing a high-profile deal worth $17.4 billion with Nebius and subsequently partnering with Iren. According to an 8-K filing, Iren is set to supply Microsoft with Nvidia GB300 GPUs under a five-year agreement valued at $9.7 billion.
With shares of Iren soaring nearly 600% in 2025, questions arise regarding the sustainability of this growth. Despite its rapid ascent, Iren generated about $500 million in revenue last year, resulting in a significant market capitalization nearing $18 billion, suggesting the stock may be overvalued based on traditional metrics. However, should the company realize consistent revenue from the recent Microsoft agreement, escalating to approximately $2.4 billion annually, this would yield an implied forward price-to-sales (P/S) ratio of 7.3—potentially justifiable in the context of projected trillion-dollar investments in AI infrastructure over the coming years.
Given the favorable market conditions and Iren’s strategic positioning, analysts suggest that it still holds potential for growth, making it a compelling option for investors looking to gain exposure in the burgeoning AI hardware and services sector.
