IREN Regains Momentum. Here’s Why You Should Buy Now

The AI infrastructure sector is going through a rough patch, with shares of high-flyers like CoreWeave (NASDAQ:CRWV), Nebius Group (NASDAQ:NBIS | NBIS Price Prediction) and other “neocloud” providers tumbling amid valuation fears, potential delays in hyperscaler spending, and broader market rotation away from growth names. 

IREN (NASDAQ:IREN) — a renewable-powered data center operator that successfully pivoted from Bitcoin mining to high-performance AI cloud computing — got caught in the crossfire. Shares plunged roughly 36% from their early-November peak near $77 as investors questioned whether the AI boom could sustain its blistering pace.

But the sharp selloff appears to have largely run its course. More importantly, the fundamental catalyst that can propel IREN’s stock significantly higher remains firmly intact: the transformative $9.7 billion, five-year AI cloud contract with Microsoft (NASDAQ:MSFT) announced earlier this month. It validates IREN’s strategy, secures massive upfront cash, and positions the company as a go-to provider in a market starving for immediately available, renewable energy-powered compute.

Massive Upside Ahead

When Microsoft disclosed it was paying nearly $10 billion for priority access to tens of thousands of Nvidia (NASDAQ:NVDA) GB300 GPUs hosted in IREN’s liquid-cooled data centers (primarily at its 750 megawatt (MW) Childress, Tex. site), the market’s initial reaction sent shares soaring over 25% intraday to a new all-time high. 

Yet as sector-wide concerns mounted — contagion fears from Applied Digital‘s (NASDAQ:APLD) recent debt offering, uncertainty ahead of Nvidia earnings today, and macro jitters — IREN’s gains evaporated. Now, that the worst of the panic appears over, investors are refocusing on what this deal actually means:

• Massive, high-visibility revenue: Approximately $1.9 billion in annualized run-rate from Microsoft alone, with a 20% prepayment (about $1.9 billion in cash) that de-risks IREN’s parallel $5.8 billion hardware purchase from Dell (NYSE:DELL).
• Blueprint for hyperscaler partnerships: Microsoft, facing its own GPU shortages that have constrained Azure AI growth, chose IREN over building from scratch or waiting on congested grids. This serves as the ultimate endorsement for IREN’s model and opens doors to similar deals with Amazon (NASDAQ:AMZN), Google, Meta Platforms (NASDAQ:META), and others.
• Acceleration of the AI pivot: IREN’s management now targets $3.4 billion in AI cloud annualized recurring revenue by the end of 2026, scaling to over 140,000 GPUs. That’s an astronomical leap from the 23,000 GPUs they had committed to just months ago.

In short, the Microsoft contract provides a solid foundation to launch the next round of growth. While peers scramble for financing or face multi-year delays securing power, IREN will be executing its plan with customer money in hand.

Power Ownership in a Capacity-Constrained World

The genius of IREN’s positioning isn’t the GPUs, it’s the 2.9 gigawatts (GW) of secured, owned power capacity across Texas and British Columbia, with a roadmap to over 5 GW by 2027, all powered by 100% renewables. As Microsoft CEO Satya Nadella recently said, “compute is not the bottleneck, but energy and data center space is.” 

In an industry where Morgan Stanley estimates a 65 GW U.S. data center power shortfall over the coming years — and new grid connections can take five to seven years to complete — IREN’s “shovel-ready” megawatts are pure gold.

Hyperscalers like Microsoft aren’t short on cash; they’re short on watts. IREN delivers immediately available, low-cost, ESG-compliant power with industry-leading development economics thanks to its vertical integration: it owns the land, substations, and long-term contracts. Add in a dual revenue stream from its Bitcoin mining operations, and IREN offers downside protection that most pure-play AI data center stocks lack.

Key Takeaway

Despite IREN’s 400% stock surge before the pullback, its shares trade at a discount given the growth trajectory. Although it goes for 50 times estimated earnings, IREN is expected to grow earnings at an 88% compounded annual rate for the next five years. That gives it a minuscule price-to-earnings-to-growth (PEG) of just 0.28.

Analysts have raised their price targets into the $70 to $142 per share range after the Microsoft deal, implying 50% to 200% upside from current levels around $48 per share. The prepayment alone covers a huge chunk of near-term capex, strengthening IREN’s already strong balance sheet.

There will be volatility, with Bitcoin price swings, nervous sentiment around AI capex sustainability, and broader market valuations, but every meaningful dip of IREN stock in 2025 has been a buying opportunity, and this one feels no different.

For investors willing to stomach some near-term swings, IREN remains one of the best ways to ride the AI infrastructure supercycle.