Iris Energy

IREN

Market cap $13.8B

IREN is rapidly transforming from bitcoin mining to AI and HPC data center infrastructure, leveraging its energy assets for higher-margin growth. AI services revenue at IREN surged 137% quarter-over-quarter to $17.3 million, with gross margins of 86%, while bitcoin revenue and margins declined. IREN projects $3.4 billion in ARR for 2026, with $2.3 billion already under contract, anchored by a major Microsoft deal used as financing collateral.

IREN Limited is transitioning from bitcoin mining to AI cloud computing, anchored by a $9.7B Microsoft contract. Despite strong long-term prospects and 4.5 GW in secured power capacity, near-term earnings are pressured by upfront capex and execution risk. At ~4x 2026 ARR, IREN trades cheaply versus peers, but current revenue and profitability metrics remain weak, making valuation a key risk.

Added 3,333,423 shares of IREN; estimated trade size $171.96 million (based on quarterly average price). IREN stake's quarter-end value rose by $124.65 million, reflecting both stock price movements and share additions.

Iren is executing a successful pivot from Bitcoin mining to AI Cloud services, targeting 140,000 GPUs deployed by year-end. Q2'26 results beat EPS estimates but missed on revenue, triggering a sell-off and creating an attractive entry point given the company's growth trajectory. IREN's $9.7B, 5-year Microsoft deal and phased Nvidia system deliveries underpin a projected 50% ARR increase to $3.4B by FY 2026.

Q2 revenue fell to $184.7M as Bitcoin declined, but $3.4B AI ARR target remains intact for 2026. Over 4.5GW secured power portfolio, yet only ~10% required to support $3.4B contracted ARR plan. $3.6B GPU financing plus customer prepayments cover ~95% of Microsoft-related CapEx obligations.

Strategy's expanding Bitcoin holdings and lower valuation give it an edge over IREN, which faces near-term pressure from its AI pivot.

IREN Limited missed Q2 revenue expectations badly due to the Bitcoin selloff, but the market is already looking past mining volatility toward the AI data center buildout. Specifically, Q2 revenue fell 23% sequentially to $184.7M and came in almost 20% below expectations, with more than 90% still tied to legacy Bitcoin mining. The key milestone was the $3.6B delayed-draw term loan. Add in the $1.9B of Microsoft prepayments, and the package covers about 95% of GPU CapEx for Horizons 1–4 data centers.

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IREN Limited remains a compelling buy after a 22% post-earnings pullback, with robust AI cloud growth offsetting Bitcoin mining headwinds. Q2 FY26 revenues surged 60% to $184.7M, driven by a 541% y/y increase in AI services, while management reaffirmed a $3.4B ARR target for 2026. IREN's strategic advances in power procurement, GPU deployments, and favorable financing underpin its capacity to accelerate growth and attract new hyperscaler contracts.

IREN (NASDAQ:IREN) and Cipher Mining (NASDAQ:CIFR) are former crypto miners that have pivoted to AI infrastructure.