Key Takeaways
- Jefferies launched coverage on IREN with a Buy recommendation and set a $79 price objective, suggesting approximately 30% potential gains from current levels near $60.50.
- Shares of IREN climbed roughly 5% during premarket hours Thursday after the coverage announcement.
- The brokerage highlighted IREN’s strategic partnerships with Microsoft and Nvidia, which could generate $3.1B in annual recurring revenue.
- Jefferies projects IREN’s AI cloud infrastructure approach will yield superior long-term returns (~21%) compared to traditional colocation strategies (~13%).
- The company is pursuing international growth, including its recent purchase of Spanish data center developer Nostrum and plans for an 800 MW facility in South Australia.
Shares of IREN Limited (IREN) rose approximately 5% during premarket trading Thursday following Jefferies’ announcement of a new Buy rating alongside a $79 price objective. The equity was hovering near $60.50 prior to Thursday’s trading session.
Analyst Jonathan Petersen from Jefferies spearheaded the coverage initiation, emphasizing IREN’s substantial power capacity portfolio and its strategic transformation from cryptocurrency mining operations toward AI cloud services as primary catalysts for the optimistic rating.
According to the firm’s analysis, IREN controls access to approximately 6 gigawatts of secured energy capacity worldwide. Remarkably, only about 10% of this capacity is currently deployed. This significant utilization gap represents a substantial growth opportunity in Jefferies’ view.
The company’s two flagship agreements involve Microsoft and Nvidia. The Microsoft arrangement at the Childress location is structured as a five-year, $9.7 billion agreement for Nvidia GB300 GPU infrastructure. This deal features a $1.9 billion advance payment along with $3.65 billion in GPU financing carrying approximately 6% interest.
The Nvidia partnership, valued at $3.4 billion for AI Cloud services, was secured soon thereafter. Combined, Jefferies estimates these two agreements alone position IREN to generate $3.1 billion in annual recurring revenue.
According to the brokerage, the Microsoft deal’s framework enables IREN to recover its $8.8 billion capital investment during the contract period, delivering unlevered internal rates of return exceeding 20%.
Comparing AI Cloud to Colocation Models
Jefferies presented a compelling case supporting IREN’s decision to operate proprietary AI cloud infrastructure instead of merely renting out data center capacity. Across a 10 to 20 year horizon, the firm forecasts AI cloud returns averaging approximately 21% versus only 13% through a colocation approach.
This performance gap widens over extended timeframes, and Jefferies maintains that controlling land assets and data center facilities provides IREN with strategic flexibility unavailable to companies focused solely on leasing arrangements.
Petersen characterized IREN as occupying “a unique place among AI infrastructure providers,” emphasizing that property and facility ownership enables the company to accommodate diverse customer requirements ranging from powered shell configurations through complete GPU cloud implementations.
International Growth Initiatives
IREN continues pursuing aggressive expansion. The organization recently announced acquiring Nostrum, a Spanish AI data center developer contributing roughly 490 megawatts of electrical grid capacity across Europe.
Prior to that transaction, IREN revealed intentions to develop an 800-megawatt data center complex in South Australia, specifically targeting AI infrastructure demand throughout the Asia-Pacific marketplace.
Jefferies also observed IREN maintains a healthy financial position. After accounting for GPU hardware and data center capital expenditures, the firm calculates IREN retains approximately $250 million in available capital for additional projects. However, some market observers suggest this figure might approach $900 million when incorporating recent fundraising activities.
Jefferies positioned IREN as a direct rival to CoreWeave (CRWV) and Nebius (NBIS), both operating within the comparable vertically integrated AI infrastructure sector.
IREN stock finished Wednesday’s session trading around $60.50, with Jefferies’ $79 price objective implying approximately 30% appreciation potential from current valuations.
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