TLDR
- Iren Limited secured a five-year $9.7 billion contract to supply Microsoft with AI GPUs
- Canaccord analysts increased IREN price target to $70 from $42 with buy rating intact
- Deal includes 20% upfront payment and 32% projected internal rate of return
- Company reported $240.3 million quarterly revenue, up 355% from prior year
- Two-gigawatt Sweetwater 1 data center launching in 2026 as next growth driver
Iren Limited stock fell 6.8% Friday to close at $62.38. But analysts see major upside ahead for the company.
The former bitcoin miner just announced a five-year, $9.7 billion GPU cloud deal with Microsoft. Canaccord Genuity called it a game-changer for the business.
The brokerage lifted its IREN stock price target to $70 from $42. It kept its buy rating on shares following the Microsoft news.
Microsoft agreed to prepay 20% of the total contract value upfront. This gives Iren capital to purchase necessary GPUs and expand infrastructure.
Analysts estimate the deal will generate a 32% levered internal rate of return. Joseph Vafi and his team believe the partnership will shift investor focus from crypto mining to AI operations.
Microsoft Deal Structure and Revenue Impact
Iren will deliver Nvidia GB300 GPUs to Microsoft from its Texas-based Horizon data centers. The Horizon buildout carries an estimated $3 billion price tag.
The Microsoft agreement should cover roughly half of those construction costs. While chip supply and power availability pose risks, Microsoft’s prepayment and backing reduce some uncertainty.
The contract multiplies Iren’s annual revenue run rate by five. Current year ARR stands at $500 million, which will jump to $2.5 billion when the Microsoft deal ramps up.
Management projects ARR will climb to $3.4 billion by the close of 2026. That’s a dramatic transformation for a company with roots in cryptocurrency mining.
Iren announced in early October it had locked down multiyear contracts for 11,000 of its 23,000 AI GPUs. These deals bring in approximately $225 million in revenue with two-year payback periods.
The company said it’s on pace to lease out its remaining 12,000 chips before year-end. Following strong October performance, Iren raised $1 billion through a convertible bond offering that exceeded initial targets.
Expansion Plans and Growth Projections
The zero-coupon convertible notes carried a 42.5% conversion premium. They convert to equity if shares reach about $91, based on the $64 trading price at issuance.
Iren spent $56.7 million on capped calls to minimize shareholder dilution. These push the effective conversion price above $120.18 per share.
Canaccord identified the Sweetwater 1 location as Iren’s next major catalyst. The two-gigawatt facility is set to begin operations in 2026.
Data center power constraints are creating strong demand from large tech companies. Canaccord increased its Sweetwater site valuation to $32 per share.
Iren maintains contracted land and power for additional growth beyond current capacity. The company is negotiating to expand from 23,000 GPUs to potentially 100,000 GPUs.
Most recent quarterly results showed $240.3 million in revenue. That represents 355% growth compared to the same period last year.
The existing $2.5 billion ARR commitment uses only about 350 MW of available power. Iren still has 2 GW of contracted power at Sweetwater waiting to be deployed.
IREN stock currently trades at 5 times projected 2026 ARR. Canaccord highlighted the company’s scale, affordable power access, and operational capabilities as competitive advantages in both crypto and AI markets.
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