Simply put
- While maintaining his Outperform rating, Bernstein lowered IREN’s price target from $125 to $100 due to the decline in Bitcoin mining and stock dilution.
- IREN is moving from Bitcoin mining to the AI cloud, anchored by a Microsoft GPU contract worth $1.94 billion in annual revenue.
- Bernstein predicts that once IREN scales to 275,000 GPUs, it will generate $6 billion in cloud revenue and approximately 82% EBITDA margins by 2030.
Bernstein analysts on Monday lowered their price target for IREN to $100 per share from $125, while reaffirming the stock as a top pick among AI-focused stocks. Bitcoin Miners cited the company’s rapid transformation into a super-scale AI cloud provider and the expectation that it will completely wind down its crypto mining operations over the next few years.
The investment firm said the target reduction reflects two factors unrelated to IREN’s business outlook, namely a reduction in Bitcoin mining and an increase in outstanding shares due to a recent stock issuance, and does not worsen the company’s AI ambitions.
At the center of the bullish lawsuit is a major deal with Microsoft. IREN has signed 77,000 of its 150,000 GPUs to the software giant under a five-year deal with annual revenue of approximately $1.94 billion. The remaining GPU capacity is being sold to on-demand cloud customers, with $400 million in contracts already in place as of February.
To finance the expansion, IREN entered into a $5.8 billion purchase agreement with Dell for Nvidia GB300 processors and secured $3.6 billion in GPU-backed funding at an interest rate of less than 6%. Combined with Microsoft’s upfront payment, the deal covers about 95% of the capital needed for the deal with Microsoft, analysts said.
Bernstein predicts that IREN’s AI cloud revenue will reach $2.6 billion in 2027 and rise to $6 billion by 2030, with the company on track to operate 275,000 GPUs in 2030, up from 150,000 today. Adjusted EBITDA margins are expected to stabilize in size at close to 82%, implying earnings before interest, taxes, depreciation and amortization of nearly $5 billion by the end of the decade.
The company’s 4.5 gigawatts of electricity holdings across Texas, British Columbia and Oklahoma support its long-term growth story. Mr. Bernstein valued IREN’s 3.6 gigawatts of undeveloped capacity in Sweetwater and Oklahoma at $3 million per megawatt, contributing approximately $10.8 billion to the company’s total valuation.
Bitcoin mining, once the core of IREN’s business, is assigned a value of zero in the updated model. Analysts expect the company to continue replacing mining hardware with GPU racks as it reuses existing infrastructure for cloud workloads. Bernstein expects the company’s mining revenues to decline sharply over the next few years, reaching zero in fiscal 2030.
Many other prominent Bitcoin mining companies include accepted AI opportunities In recent months, amid the AI boom, some people have even given up on crypto mining altogether.
IREN stock recently traded at $43.78, down more than 9% on the day, amid a broader decline in AI stocks related to reports of OpenAI’s poor performance. Over the past month, IREN stock has risen nearly 25%. At current prices, Bernstein’s price target implies an upside of about 128% for investors.
