Analysts at Bernstein have revised their price target for IREN shares, lowering it from $125 to $100 on Monday, while maintaining the company’s status as their leading choice among AI-focused Bitcoin miners. This adjustment comes as the company shifts its focus towards becoming a superscale AI cloud provider, with an anticipation of fully phasing out its cryptocurrency mining operations in the coming years.
The target reduction is attributed to two factors that are not reflective of the company’s business viability: a decline in Bitcoin mining activities and an increase in shares outstanding due to recent equity issuances. Importantly, there is no indication of any degradation in IREN’s ambitions in the AI sector.
Central to the bullish outlook for IREN is a significant partnership with Microsoft. The company has secured a five-year agreement to supply 77,000 of its 150,000 GPUs to the tech giant, which is poised to generate approximately $1.94 billion annually. Additionally, IREN is leveraging the remaining GPU capacity, having already signed contracts worth $400 million with on-demand cloud clients as of February.
To fund this extensive buildout, IREN has entered into a $5.8 billion purchase agreement with Dell for Nvidia GB300 processors, along with securing GPU-backed financing amounting to $3.6 billion, with an interest rate below 6%. This financial strategy, coupled with Microsoft’s prepayments, is intended to cover approximately 95% of the capital required for the Microsoft contract, as suggested by analysts.
Looking ahead, Bernstein projects that IREN’s AI cloud revenues could reach $2.6 billion by 2027, climbing further to $6 billion by 2030. By that time, the company aims to operate a fleet of 275,000 GPUs, a significant increase from its current capacity of 150,000. The adjusted EBITDA margins are anticipated to stabilize around 82% at scale, potentially translating to nearly $5 billion in earnings before interest, taxes, depreciation, and amortization by the end of the decade.
The company’s 4.5 gigawatts of power holdings—spread across various sites in Texas, British Columbia, and Oklahoma—support this long-term growth narrative. Bernstein has assigned a value of $3 million per megawatt to IREN’s 3.6 gigawatts of undeveloped capacity in Sweetwater and Oklahoma, contributing approximately $10.8 billion to the firm’s sum-of-the-parts valuation.
In the updated model, traditional Bitcoin mining, which used to be the core of IREN’s business, is valued at zero. Analysts predict that as the company continues to replace mining hardware with GPU racks to accommodate cloud workloads, its mining revenue will decrease in the coming years, ultimately reaching zero by fiscal year 2030.
As part of a broader trend, many prominent Bitcoin mining firms have also shifted their focus towards AI opportunities in recent months, with some opting to abandon crypto mining altogether amidst the AI surge.
Recently, IREN shares were trading at $43.78, reflecting a drop of more than 9% on the day, influenced by a broader downturn in AI-related stocks following concerns about OpenAI’s performance. However, over the past month, the shares have gained nearly 25%. At the current trading price, Bernstein’s reduced price target indicates an approximate 128% upside potential for investors.
