IREN’s $25 Billion AI Buildout Raises Investor Concerns
IREN’s plan to invest between $25 billion and $30 billion in fiscal 2027 may have worried investors. Analysts at Bernstein said the large capital spending target could have “spooked the market.” However, they believe investors may be overlooking the improving economics of IREN’s AI cloud business.
Bernstein analysts said GPU investments are now generating faster returns. They estimate the payback period for GPU capital spending has fallen to about two years. This compares with roughly three years under IREN’s 2025 Microsoft agreement.
IREN Reports Strong Growth in AI Cloud Revenue
IREN’s fiscal 2026 results showed strong growth in its AI cloud operations. AI cloud revenue increased nearly eight times to $128.8 million. The business generated $16.4 million in revenue during the previous year.
Bitcoin mining also remained a major revenue source. The company generated $578.2 million from bitcoin mining in fiscal 2026. That represents a 19% increase from the previous year.
IREN’s total revenue reached $707 million, compared with $501 million in 2025. However, the company reported a net loss of $702.6 million. This compared with net income of $86.9 million a year earlier. The loss was partly linked to $638.8 million in impairments from retiring bitcoin mining hardware.
AI Cloud Economics Continue to Improve
Bernstein highlighted stronger revenue potential from IREN’s AI cloud infrastructure. The company generated around $10 million in annual revenue per IT megawatt under its Microsoft agreement. New three-year contracts are generating more than $20 million per IT megawatt.
Bernstein said IREN is also discussing longer contracts. Some potential three-to-five-year deals could generate around $25 million per IT megawatt. This could significantly improve the economics of IREN’s AI infrastructure over time.
IREN currently has about $1 billion in annualized cloud revenue. It also has approximately $4 billion in contracted cloud ARR for its 2026 capacity. Including an expected $700 million Nvidia contract for 2027, Bernstein estimates total contracted cloud ARR at $4.7 billion.
IREN Expands AI Infrastructure Funding
IREN has secured about $19 billion through customer prepayments, GPU financing, convertible debt, and equity issuance over the past year. Bernstein estimates that around $14 billion remains in cash or has not yet been drawn.
The analysts expect IREN to secure another $8 billion through GPU financing and customer prepayments. Operating cash flow and data center financing could provide additional funding for the remaining buildout costs.
IREN also benefits from its existing powered infrastructure. New U.S. data centers can take years to receive grid connections. Existing infrastructure could therefore give IREN an advantage as demand for AI computing capacity increases.
Bernstein maintained its Outperform rating on IREN. The firm also kept its $100 price target. Based on IREN’s Thursday closing price of $40.53, that target represents significant potential upside. However, the company’s aggressive expansion also carries substantial capital and execution risks.
