IREN Stock Price Forecast - IREN’s $9.7 B Microsoft Contract Redefines Its Future

NASDAQ:IREN’s Transition From Bitcoin Mining To AI Infrastructure Powerhouse

IREN Limited (NASDAQ:IREN) has undergone one of the most dramatic business pivots in the AI infrastructure landscape, moving from a Bitcoin miner into a vertically integrated data center and GPU-as-a-Service operator. The stock trades near $47.81, down from a 52-week high of $76.87, after an explosive 390% YTD rally. Its market capitalization sits around $13.73 billion, reflecting the scale of investor expectations following its $9.7 billion, five-year GPU cloud contract with Microsoft (NASDAQ:MSFT). That deal alone represents a potential $1.9 billion in annual recurring revenue (ARR) and a 20% prepayment of $1.94 billion, providing critical non-dilutive funding for its hyperscale data center expansion.

Strategic Integration: Control Over Power, Infrastructure, And Compute Stack

IREN’s defining advantage lies in full-stack ownership. The company develops, engineers, and operates its own data centers—controlling the power substations, transmission infrastructure, and GPU deployment. This vertical control allows it to bypass the leasing inefficiencies seen in competitors like CoreWeave (CRWV). CEO Daniel Roberts emphasized that IREN’s direct ownership of high-voltage facilities ensures end-to-end reliability and scalable power delivery—critical in an era where grid interconnect bottlenecks have delayed hyperscaler projects across the U.S. IREN currently commands 3 GW of secured capacity, including 750 MW in Childress, Texas, 2 GW in Sweetwater, and 160 MW in British Columbia, all positioned to host next-generation NVIDIA (NASDAQ:NVDA) Blackwell GPUs.

Financial Structure And Capital Risk

IREN holds $1.032 billion in cash and $965.2 million in long-term debt, giving it a debt-to-equity ratio of 0.34 and a debt-to-EBITDA ratio of 1.0, both relatively conservative. However, the company’s aggressive CapEx plan introduces significant future funding pressure. The $1.94 billion Microsoft prepayment temporarily defers capital raises, but IREN’s ongoing buildout to 140,000 GPUs will require additional financing. Its free cash flow sits at -$125.6 million, reflecting the heavy upfront investment phase. In October 2025, IREN issued $1 billion in convertible notes, triggering a 25% share price drop, underscoring market sensitivity to dilution.

Explosive Growth But Margin Compression

In Q1 FY2026, IREN reported $240.3 million in revenue, up 355% YoY, marking its fifth consecutive record quarter. However, EBITDA margins fell to 38%, primarily due to $32.8 million in payroll taxes on stock-based compensation and $23.9 million in accelerated amortization tied to share price milestones. Adjusted for these nonrecurring costs, operational margins remain solid. The net income surged 843.9% to $384.6 million, yet free cash flow remained negative, reflecting the capital-intensive nature of hyperscale expansion.

GPU Expansion And AI Capacity Deployment

IREN has successfully deployed 23,000 GPUs generating $500 million ARR, with a clear roadmap to scale to 140,000 GPUs, targeting $3.4 billion ARR once fully ramped. The Microsoft contract accounts for 57% of FY2026 ARR guidance, while remaining deployments are anchored in its Canadian and Texan sites. Its data centers are designed for liquid cooling densities up to 200 kW per rack, making IREN one of the few AI-native infrastructure firms capable of hosting next-gen NVIDIA Blackwell and Grace Hopper architectures.

Competitive Position: IREN Versus CoreWeave And Nebius

Compared with CoreWeave and Nebius, IREN operates as a pure-play infrastructure provider—offering colocation and GPU-as-a-Service but no software layers. While CoreWeave leases data centers and Nebius integrates full-stack cloud and PaaS/SaaS services, IREN’s edge lies in asset ownership and cost control. However, Nebius is currently outpacing IREN in scale, boasting 2.5 GW deployed across Finland, Israel, and the UK, with $7–9 billion ARR projected by late 2026. IREN’s comparable ramp will not fully materialize until 2027, when Childress and Sweetwater reach peak energization.

Valuation Metrics And Peer Comparison

At $47.81 per share, IREN trades at a forward P/E of 47.5, a P/S ratio of 4.77, and a PEG ratio of 0.23, implying undervaluation relative to expected 172.9% EPS growth. The EV/EBITDA multiple of 16.8x compares favorably to TeraWulf (115.5x) and Applied Digital (107.9x). IREN’s TTM EBITDA margin of 33.6% ranks second only to CoreWeave’s 50%, and its gross margin of 69.8% underscores strong operational efficiency. Analysts forecast EBITDA growth from $708 million in FY2026 to $2.95 billion in FY2028, representing a 103.8% CAGR.

AI Cloud Contracts And Recurring Revenue Outlook

The $9.7 billion Microsoft agreement is transformative—equating to $1.9 billion in annualized run-rate revenue with ~85% project margins and 5-year visibility. Beyond Microsoft, IREN is negotiating with multiple hyperscalers for additional Blackwell GPU deployments, positioning itself as a secondary infrastructure source to major AI firms seeking immediate power and cooling capacity. With ARR projected at $3.4 billion by late 2026, IREN’s valuation at 5x forward sales is conservative compared to peers trading above 10x.

Operational Risks And Market Sensitivity

Execution remains IREN’s main vulnerability. Delays in grid interconnections, GPU deliveries (especially through Dell Technologies (NYSE:DELL)), or hyperscaler ramp timelines could disrupt EBITDA projections. The company’s reliance on Microsoft as its dominant client also concentrates risk. However, IREN has maintained 100% commissioning reliability across all projects since its IPO, a rarity in the AI infrastructure sector. Short interest of 19% reflects both skepticism and high speculative trading.

Price Outlook And Market Sentiment

Wall Street consensus targets $81.38, implying 68% upside, with estimates ranging from $24 to $136, reflecting deep uncertainty. Despite JPMorgan’s cautious Underweight rating ($39 target), bullish projections from Citizens JMP ($80) and Bernstein ($125) highlight optimism around IREN’s vertically integrated model. If the company sustains its ramp pace and maintains liquidity through 2026, NASDAQ:IREN could reprice toward $100–$120 by 2027 as revenue visibility strengthens and CapEx intensity normalizes.

Final Outlook: NASDAQ:IREN’s Risk-Reward Equation

IREN (NASDAQ:IREN) stands at the intersection of AI infrastructure and energy integration, commanding 3 GW power capacity, a $1.9B Microsoft ARR, and long-term visibility extending into 2030. While speculative due to its capital structure and hyperscaler dependency, its fundamentals align with early-stage AI infrastructure utilities. With high-margin contracts, vertically integrated operations, and structural scarcity in power availability, the risk/reward balance remains asymmetric. Based on the data, IREN merits a “Buy” rating for aggressive growth investors targeting 2027–2028 appreciation, contingent on sustained GPU deployment and stable liquidity.

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