IREN’s Strategic Pivot: From Bitcoin Mining to AI Powerhouse Gains Traction

The investment thesis for IREN is undergoing a fundamental transformation, driven by its decisive shift from cryptocurrency mining toward becoming a provider of high-performance computing (HPC) and artificial intelligence infrastructure. This strategic redirection is now receiving concrete validation from both financial performance and major partnership deals, prompting a significant reassessment of the company's future value.

A solid foundation for the recent optimism was laid in November 2025, when IREN reported first-quarter results for fiscal year 2026 that substantially exceeded market expectations. The company posted earnings per share of $1.08, dramatically outpacing the analyst consensus estimate of $0.14. Quarterly revenue reached $240.3 million, also coming in above forecasts.

These figures signal that the new HPC infrastructure is generating revenue and profit faster than anticipated. More importantly, they represent a departure from the company's historically volatile earnings profile, highlighting the stability and profitability potential of its new contractual business model. Market participation has been robust, with trading volume recently spiking to 40.5 million shares, well above average levels.

The Microsoft Agreement and Analyst Endorsement

Central to IREN's new direction is a pivotal five-year cloud agreement with Microsoft, valued at $9.7 billion, which was finalized in November 2025. According to analysis from H.C. Wainwright, this contract is expected to be fully monetized by the end of 2026. The firm estimates that just 200 MW of IT capacity from this deal could generate approximately $1.94 billion in annual recurring revenue. IREN's own management has set an even more ambitious target, aiming for $3.4 billion in annualized AI-cloud revenue by the conclusion of 2026.

This outlook prompted H.C. Wainwright to upgrade IREN's rating to "Buy" on January 13, simultaneously raising its price target to $80 per share. This target implies a potential upside of roughly 50% from recent price levels. The broader analyst community maintains a positive stance, with the average price target among major firms now around $70, and the high end of the range at $80.

Should investors sell immediately? Or is it worth buying IREN?

Funding the Vision and Institutional Backing

To finance its massive expansion plans, IREN has secured $2.3 billion through convertible notes. This capital is deemed sufficient to fund the development of new data centers, a critical prerequisite for fulfilling the Microsoft contract and executing a planned development pipeline targeting 2 GW of capacity by 2027.

The company also recently filed a shelf registration statement for approximately $661 million (17.5 million shares) related to its Employee Stock Ownership Plan (ESOP), a tool frequently used to attract and retain key talent during high-growth phases. Institutional investors remain committed, holding about 41% of the free float, with recent reports indicating that hedge funds have been increasing their positions, betting squarely on the success of the AI pivot.

Valuation and Share Price Trajectory

From a valuation perspective, analysts note that despite a significant rally, the shares are trading at an expected price-to-sales multiple of under 5. This is considered a competitive level when compared to other AI infrastructure stocks. The market's optimism is clearly reflected in the share price performance: over the past 30 days, the stock has advanced approximately 75%, recently trading at $52.99. On a 12-month view, the gain stands at nearly 400%, though the price remains about 20% below its 52-week high. Technically, the stock has breached the psychologically important $50 level.

Key Upcoming Catalysts

Attention now turns to the upcoming report for the second quarter of fiscal 2026, scheduled for February 11, 2026. The market is likely to scrutinize several key areas:
* Progress on expanding GPU capacity.
* The status of the company's campus project in Texas.
* Concrete updates on the pace of revenue realization from the Microsoft partnership.

The sustainability of the current breakout will likely be determined by the Q2 results and subsequent execution milestones in the evolving AI business segment. The core question for investors remains whether the nascent AI and cloud operations can justify the company's elevated valuation over the coming years.