The latest results from IREN (IREN) offer a glimpse of a company in the midst of a transition, with the stock currently paying the price for that transition. Company Reported Lower Than Expected Revenue and Profit as Bitcoin mining has taken a back seat to its rapidly expanding AI cloud ambitions.
Crushed by record margins after the 2024 halving, Bitcoin miners are transforming into digital infrastructure players, converting energy-intensive mining sites into AI-ready data centers in an effort to generate more stable, long-term revenue.
One of the best performing stocks of the last year, not just in crypto, but for the entire market, IREN has come back to earth a bit since hitting an all-time high near $77 in November. Down about 20% amid Thursday’s stock market crash, shares are flat Friday at $39.77.
IREN has secured $3.6 billion in GPU financing tied to its Microsoft contract, as well as a $1.9 billion customer prepayment, funding that management says will cover about 95% of GPU-related capital expenditures as it expands its AI business, a development that JPMorgan analysts Reginald Smith and Charles Pearce called encouraging.
IREN’s second-quarter fiscal revenue fell sequentially as a decline in the average hashrate, fewer coins mined and a quarterly drop in bitcoin prices weighed on results, according to the Wall Street bank.
The drag in the mining sector was partly offset by rapid growth in cloud services, whose revenue more than doubled from the previous quarter to $17 million. That figure was higher than JPMorgan’s estimate of $14 million, but well below the Street’s forecast of $28 million. Management said all currently powered GPUs are fully contracted, a signal the bank called encouraging as the company moves toward AI infrastructure.
Cost control also helped cushion the quarter. Cash SG&A expenses fell sharply to $43 million, while power costs declined due to a lower average hashrate. As a result, adjusted EBITDA reached $75 million, beating the bank’s estimate, thanks to lower operating and energy expenses. The bank has an underweight rating on the stock.
Investment bank B. Riley raised its price target on IREN from $74 to $83, 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, in which adjusted EBITDA of $75.3 million missed expectations. Riley said the shortfall is dwarfed by IREN’s progress on its AI pivot, including $3.6 billion in low-cost GPU funding tied to its deal with Microsoft, a $1.9 billion prepayment that covers about 95% of GPU investments, and an expanded energy portfolio now exceeding 4.5 gigawatts (GW).
Compass Point analyst Michael Donovan reiterated a Buy rating and $105 price target on IREN, saying the latest earnings show a company better positioned for growth, even though recent results have been weaker. He said IREN now has a more secure power supply and a clearer plan to finance its expansion, which matters more than a difficult quarter.
Donovan described the fourth quarter as a time of change. Revenue fell to $184.7 million as the company mined fewer bitcoins while moving its facilities from older bitcoin-focused machines to newer chips used for artificial intelligence. Nonetheless, revenue distribution has improved as AI-related services have started to represent a larger share of the business.
He highlighted the $3.6 billion financial package linked to IREN’s Microsoft project as an important milestone. The funding is larger than initially anticipated and is structured so that money will be drawn down as construction progresses and revenue contracts come into effect.
Donovan expects IREN to begin recognizing revenue from Microsoft toward the end of the second quarter of 2026, with revenue increasing in stages thereafter. By the end of 2026, he envisions the company could generate about $3.4 billion in annualized revenue.
Learn more: Weak Profits Drive IREN, Amazon; Bitcoin Stocks Rebound Premarket
