In a recent analysis, Bernstein has reduced its price target for IREN, lowering it from $125 to $100 per share while maintaining an Outperform rating. The adjustment comes amid the company’s transition away from Bitcoin mining toward a more prominent focus on artificial intelligence (AI) cloud services. This shift is underpinned by a lucrative five-year contract with Microsoft, projected to generate approximately $1.94 billion in annualized revenue.
Bernstein attributes the price target cut primarily to two factors: a significant scaling back of Bitcoin mining operations and an increase in shares outstanding due to recent equity issuances. Importantly, this adjustment does not stem from concerns regarding IREN’s ambitions in the AI space. Analysts readily acknowledge that the company’s rapid transformation into what they term a “superscale AI cloud provider” reflects its evolving business model.
The cornerstone of IREN’s growth strategy is its deal with Microsoft, where the company has provisioned 77,000 of its current fleet of 150,000 GPUs. Additional capacity is being marketed to on-demand cloud customers, with contracts totaling $400 million secured as of February. To finance its ambitious expansion, IREN has engaged in a $5.8 billion purchase agreement with Dell for Nvidia GB300 processors and secured $3.6 billion in GPU-backed financing at an interest rate below 6%. These arrangements, combined with Microsoft prepayments, cover around 95% of the capital required for fulfilling the Microsoft contract.
Looking ahead, Bernstein projects that IREN’s AI cloud revenues will soar to $2.6 billion by 2027 and reach an impressive $6 billion by 2030. This robust growth is expected to be fueled by the expansion of its GPU fleet to 275,000 units and stable adjusted EBITDA margins near 82%. By the end of the decade, analysts estimate that the company could generate nearly $5 billion in earnings before interest, taxes, depreciation, and amortization.
Additionally, IREN’s substantial power holdings, which include 4.5 gigawatts spanning sites in Texas, British Columbia, and Oklahoma, are seen as critical to its long-term growth narrative. Bernstein has assigned a valuation of $3 million per megawatt to IREN’s 3.6 gigawatts of undeveloped capacity in Sweetwater and Oklahoma, contributing about $10.8 billion to the firm’s sum-of-the-parts valuation.
In line with its repositioning, the updated model assigns zero value to Bitcoin mining, which was historically the backbone of IREN’s operations. Analysts expect mining revenues to diminish significantly in the coming years, ultimately reaching zero by fiscal year 2030, as the company focuses on repurposing its existing infrastructure for cloud workloads.
As the artificial intelligence boom gathers pace, many other prominent Bitcoin mining firms are also pivoting towards AI opportunities. IREN’s shares recently traded at $43.78, experiencing a decline of over 9% on the day amid a broader downturn in AI-related stocks, following reports of underperformance from OpenAI. However, IREN’s shares have appreciated nearly 25% over the past month. At the current trading price, Bernstein’s new price target implies a potential upside of approximately 128% for investors.
