IREN’s ( IREN ) latest earnings provided a snapshot of a company in the midst of transition, with shares currently paying the price of that transition. The firm reported weaker than expected revenue and earnings as bitcoin mining took a backseat to its fast-growing AI cloud ambitions.
Crushed by record low margins after the halving in 2024, bitcoin miners are remaking themselves as digital infrastructure players, converting power-hungry mining sites into AI-ready data centers in a bid for more stable, long-term earnings.
One of last year’s top performing stocks, not only in crypto but for the entire market, IREN has come back down to earth a bit since reaching record highs near $77 in November. Down about 20% amid Thursday’s market crash, shares are flat Friday at $39.77.
IREN has secured $3.6 billion in GPU financing tied to its Microsoft contract, along with a customer upfront payment of $1.9 billion, financing that management says will cover about 95% of GPU-related capital expenditures as it scales its AI business, a development JPMorgan analysts Reginald Smith and Charles Pearce described as encouraging.
IREN’s second-quarter fiscal revenue fell sequentially as lower average hash rate, fewer coins mined and a quarter-on-quarter decline in bitcoin prices weighed on the results, according to the Wall Street bank.
The drag from mining was partially offset by rapid growth in cloud services, where revenue more than doubled from the previous quarter to $17 million. That number came in above JPMorgan’s estimate of $14 million, but well below the Street’s $28 million forecast. Management said all GPUs currently enabled are fully contracted, a signal the bank described as encouraging as the company pivots toward AI infrastructure.
Cost controls also helped cushion the quarter. Cash SG&A declined sharply to $43 million, while power costs decreased due to lower average hash rate. As a result, adjusted EBITDA reached $75 million, beating the bank’s estimate, driven by lower operating and energy expenses. The bank has an underweight on the share.
Investment bank B. Riley raised its price target on IREN to $83 from $74, while reiterating its buy rating, arguing that the recent pullback has created an attractive entry point.
The upgrade comes despite a softer fiscal second quarter, where adjusted EBITDA of $75.3 million missed expectations. B. Riley said the earnings miss is overshadowed by IREN’s progress with its AI pivot, including $3.6 billion in low-cost GPU financing tied to its Microsoft deal, a $1.9 billion upfront payment that covers about 95% of GPU capex, and an expanded power portfolio that now exceeds 4.5 gigawatts (GW).
Compass Point analyst Michael Donovan reiterated a buy rating and a $105 price target on IREN, saying the latest earnings show a company better positioned for growth, even though recent results were weaker. He said IREN now has more secure power and a clearer plan to fund its expansion, which means more than a soft quarter.
Donovan described the fourth quarter as a period of change. Revenue fell to $184.7 million as the company mined less bitcoin while switching its facilities from older bitcoin-focused machines to newer chips used for artificial intelligence. Still, the mix of revenue improved as AI-related services began to make up a larger part of the business.
He pointed to the $3.6 billion funding package tied to IREN’s Microsoft project as an important milestone. The financing is larger than originally planned and is structured so that money is withdrawn as construction progresses and revenue contracts begin.
Donovan expects IREN to begin recognizing revenue from Microsoft toward the end of the second quarter of 2026, after which revenue will increase in stages. By the end of 2026, he sees a path for the company to generate about $3.4 billion in annual revenue.
Read more: Weak earnings pull IREN, Amazon; bitcoin shares are up ahead of the market
