IREN secures $2.8B AI cloud deal with Microsoft, Nvidia in pivot

IREN Ltd. signed $2.8 billion in multiyear AI cloud contracts with Microsoft Corp. and Nvidia Corp., lifting its year-end 2026 annualized revenue run-rate target above $4 billion and sending shares up nearly 20 percent. The Nasdaq-listed company, formerly known as Iris Energy, said roughly 85 percent of that target is now under contract.

"Our vertically integrated AI Cloud platform is scaling at pace," Daniel Roberts, co-founder and co-chief executive officer at IREN, said. "We have expanded from approximately 3 MW of self-built AI Cloud capacity to 480 MW being delivered this year, with 1.2 GW targeted for 2027."

Customers also include Perplexity AI, Figure AI and Together AI. The new contracts follow a separate five-year, $3.4 billion agreement with Nvidia announced in May covering managed cloud services using Blackwell systems deployed across roughly 60 megawatts at IREN's Childress campus. IREN reported $7.6 billion in cash as of June 30, including restricted funds tied to GPU financing, while customer prepayments cover roughly 45 percent of related GPU costs. The company has assembled 5 gigawatts of secured power across North America and Europe, with additional development opportunities in Australia. Some existing mining facilities can be converted for air-cooled GPUs faster and at lower cost than building entirely new liquid-cooled data centers, giving IREN a potential time-to-market advantage as AI compute supply remains tight. AI cloud revenue reached $33.6 million in the March quarter, almost doubling sequentially, as Bitcoin-mining revenue fell with equipment retirements.

The deal reflects a broader shift among Bitcoin miners repositioning as AI infrastructure providers, a transition that has decoupled their share prices from crypto cycles. Rival Hut 8 Corp. disclosed a 15-year, $9.8 billion AI data center lease in Texas on the same day, while Cipher Mining Inc., CleanSpark Inc. and MARA Holdings Inc. each rose more than 11 percent. Blocksbridge Consulting estimates miners need about $50 billion to fund their AI ambitions, with IREN carrying the largest funding gap at roughly $21.1 billion. IREN trades at about 16 times trailing sales, cheaper than Applied Digital Corp. at roughly 25.5 times and TeraWulf Inc. at 57 times, though all three multiples reflect future AI capacity not yet contributing to reported revenue.

The Funding Challenge

The scale of IREN's buildout requires significant capital beyond its current cash position. The company's $7.6 billion in cash and customer prepayments covering 45 percent of GPU costs reduce but do not eliminate the need for additional financing. IREN's contracts carry a weighted average term of about four years, providing revenue visibility, but construction delays, weaker pricing or higher financing costs could pressure the stock, which has already priced in strong execution expectations. The company reported a $247.8 million net loss in its most recent quarter, partly because of noncash mining-equipment impairments, as it retired hardware to make room for GPU deployments. Quarterly revenue was $144.8 million with adjusted EBITDA of $59.5 million.

What It Means for Investors

IREN's pivot from Bitcoin mining to AI cloud services creates a credible growth platform backed by major customers and expanding capacity. The Nvidia relationship, rising contracted revenues and rapid buildout support a positive long-term view, though the stock already reflects high expectations. Current shareholders can reasonably stay invested while watching contract conversion and margins, while new investors may prefer a calmer entry point or clearer evidence of recurring profitability. Jefferies initiated coverage on IREN, along with Hut 8 and TeraWulf, with buy ratings as part of the broader AI data center pivot, according to a recent note. The company's lower valuation multiple relative to peers offers some support, but the stock remains a high-conviction bet on execution rather than current earnings.

This article is for informational purposes only and does not constitute investment advice.