Simply put
- Bernstein has maintained its Outperform rating for IREN, but has lowered the price target from $125 to $100, attributing this change to declines in Bitcoin mining and stock dilution.
- The company is pivoting away from Bitcoin mining and focusing on AI cloud services, with a significant contract with Microsoft expected to generate $1.94 billion annually.
- Bernstein anticipates that as IREN scales up to 275,000 GPUs, it could achieve $6 billion in cloud revenue by 2030, along with an EBITDA margin of about 82%.
Analysts at Bernstein recently adjusted their price target for IREN to $100 per share, down from $125, while still seeing it as a strong choice among AI-tech stocks. They highlighted the company’s swift transition from Bitcoin mining to becoming a major AI cloud provider, noting its plans to cease crypto mining operations in the coming years.
The firm emphasized that this target reduction stems from factors unrelated to IREN’s future business health—namely, the decrease in Bitcoin mining activity and an increase in shares due to a recent stock offering. This adjustment doesn’t reflect negatively on the firm’s AI aspirations.
A critical element of their optimistic outlook is the deal with Microsoft, where IREN has committed 77,000 of its 150,000 GPUs as part of a five-year agreement, which is projected to bring in around $1.94 billion annually. The extra GPU capacity is being marketed to on-demand cloud clients, with existing contracts valued at $400 million as of February.
To facilitate its growth, IREN signed a $5.8 billion deal with Dell for Nvidia GB300 processors, alongside securing $3.6 billion in GPU-backed financing at an interest rate below 6%. This, combined with an upfront payment from Microsoft, is expected to cover around 95% of the capital required for their collaboration.
Bernstein is forecasting that IREN’s AI cloud revenue could hit $2.6 billion by 2027 and rise to $6 billion by 2030. They also project that the company will operate 275,000 GPUs by then, compared to the current 150,000, with EBITDA margins stabilizing at about 82%. This suggests earnings nearing $5 billion by the decade’s end.
With 4.5 gigawatts of electricity resources spread across Texas, British Columbia, and Oklahoma, IREN’s long-term growth potential appears solid. IREN’s undeveloped capacity in Sweetwater and Oklahoma is valued at $3 million per megawatt, potentially adding around $10.8 billion to their overall valuation.
In the updated model, Bitcoin mining—once the cornerstone of IREN’s business—is now valued at zero. Analysts foresee a sharp decrease in mining revenues over the next few years, expecting them to reach zero by fiscal 2030 as the company transitions its hardware from mining to cloud-related uses.
Other major Bitcoin mining firms are also exploring AI opportunities recently, with some even stepping away from crypto mining altogether in light of the AI boom.
IREN’s stock recently traded at $43.78, dropping over 9% during a day of market fluctuations, which some attribute to declines in AI-related stock values, particularly linked to OpenAI performance concerns. Interestingly, IREN’s stock has gained nearly 25% in the last month. Based on current prices, Bernstein’s price target indicates a potential upside of about 128% for investors.
