Key Insights
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Investing in artificial intelligence presents significant opportunities for long-term returns.
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Iren plans to launch an additional 1.4 gigawatts in April, which might lead to agreements contributing billions in recurring revenue annually.
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Broadcom stands out as a top manufacturer of custom AI chips, catering to several leading tech companies, with demand for its products continually rising.
Not every investor diversifies their holdings. Some firms see appealing long-term opportunities and opt to concentrate their investments in those areas. This strategy carries more risk, yet the potential rewards may justify it. AI appears to be a dominant trend for the decade, and choosing the right investments in this space might be worth the risk.
Take Nvidia, for instance. It presents a viable risk-reward balance and has played a significant role in creating numerous billionaires. However, there are few AI stocks that offer similar potential. There are also a couple of other AI-related options tied to the S&P 500 worth exploring.
Iren’s Path to AI Dominance
Iren (NASDAQ: IREN) operates as an AI data center provider with a pipeline of 3 gigawatts. The energy sector has emerged as a crucial factor in the AI landscape, and Iren is strategically positioned to navigate this. The company is already backed by a five-year, $9.7 billion agreement with Microsoft, which involves the 1.4-gigawatt Sweetwater 1 site, expected to be operational by April 2026.
This additional power could support multiple projects equivalent to Microsoft’s. Iren aims to achieve $3.4 billion in annual recurring revenue by 2026 while utilizing only a fraction of the electricity from its secured grid. Besides the current capacity, the company is developing even more power solutions.
Traditionally, Iren generated most of its income from cryptocurrency mining. Yet, as AI cloud revenues are rising quickly, the company is repurposing its facilities to cater to AI demand. The partnership with Microsoft is projected to yield $1.94 billion in annual recurring revenue. Iren previously indicated expectations of generating between $200 million and $250 million by the end of 2025.
If things unfold as predicted, Iren could far exceed the $3.4 billion mark in annual recurring revenue by 2026, which would be a significant win for its investors as AI continues to expand.
Broadcom’s Continued Success in AI Chips
Broadcom (NASDAQ: AVGO) is recognized as a premier designer of custom AI chips. While Nvidia’s chips are designed for broad workloads, Broadcom tailors its chips to meet the specific needs of its major clients. The surge in AI demand has positioned Broadcom favorably, as recent financial outcomes indicate its continued success.
The company reported a 28% year-over-year increase in revenue for the fourth quarter of fiscal 2025, significantly driven by its booming AI segment, which saw a remarkable 74% growth year-over-year. Moreover, projections suggest even more impressive growth for this segment in the first fiscal quarter of 2026.
Broadcom also reported a nearly double increase in net income from the previous year, with net profit margins nearing 50%. While Iren may not have been in the spotlight as much, Broadcom has captured attention. Its stock has grown nearly 700% over the last five years, and there’s potential for further growth into 2026.
Considering Iren Stock?
Before making a decision on Iren stock, there are a few things to ponder:
The Motley Fool’s analyst team has identified stocks they believe outperform Iren. According to their findings, these alternative choices could yield impressive returns in the coming years.
Reflecting on past recommendations like Netflix, which would have turned a $1,000 investment into $470,587, or Nvidia, which transformed a similar investment into over $1 million, it’s pivotal to consider past successes with the right strategies.
It’s also worth noting that the average return of the stock advisor team stands at 930%, significantly beating the S&P 500’s 192%. Joining a community of retail investors could be beneficial for navigating future investment choices.
*Stock advisor will be back on January 21, 2026.
