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IREN faces strong AI infrastructure competition and trades above industry valuation levels.
IREN is shifting to AI cloud, targeting 150,000 GPUs and $3.7B in AI cloud ARR by the end of 2026.
IREN Limited (IREN - Free Report) shares have plunged 23.1% over the past three months, underperforming the broader Zacks Finance sector and the Financial - Miscellaneous Services industry’s decline of 7.6% and 21.7%, respectively.
IREN has also underperformed industry peers, including Applied Digital (APLD - Free Report) and TeraWulf (WULF - Free Report) . In the past three months, shares of Applied Digital have plunged 20.9%, while TeraWulf shares have gained 21.5%.
This underperformance raises the question: Should investors cut their losses and exit, or is it worth holding IREN stock?
IREN is seeing near-term pressure on revenues as it moves away from Bitcoin mining and focuses more on AI cloud services. IREN’s focus on no longer being a pure-play crypto-mining company while evolving into an AI Cloud Service Provider means that the company will continue to see lower revenues from its bitcoin mining business on a quarter-on-quarter basis.
In the second quarter of fiscal 2026, total revenues fell 23% from the previous quarter. Management said this drop was mainly due to lower Bitcoin mining revenues, which declined 28.2% on a sequential basis in the second quarter of fiscal 2026.
IREN is shifting power and infrastructure away from mining and toward AI workloads. AI cloud revenues are increasing, but they are not yet large enough to fully make up for the drop in mining revenues. Management said this pressure should be temporary. As more GPUs are installed and AI cloud contracts ramp up, AI revenues are expected to become the main source of revenue. Until then, quarter-over-quarter results for Bitcoin mining revenues may remain uneven.
The Zacks Consensus Estimate for IREN’s Bitcoin mining revenues for the third quarter of fiscal 2026 is pegged at $139.6 million, which implies another sequential decline of 16.6%.
IREN Stock Faces Stiff Competition
While the AI data center market provides a strong growth outlook, solid competition from already-established players, such as Applied Digital and TeraWulf, multiplies competition for IREN.
In January 2026, Applied Digital announced that it had started construction on Delta Forge 1, a large AI data center campus in a southern U.S. state. Delta Forge 1 is designed to support up to 430 megawatts (MW) of total utility power in its initial phase. This can support up to 300 MW of critical IT load. Here, APLD’s goal is to turn available power into usable, high-density AI capacity for large customers and is designed to scale with customer demand while providing reliable performance.
In February 2026, TeraWulf announced the expansion of its digital and power infrastructure portfolio through the acquisition of two existing sites in Kentucky and Maryland. Together, these two acquisitions add about 1.5 GW of power capacity to the company’s portfolio. WULF plans to add 250 to 500 MW of new contracted capacity each year, depending on customer demand and power availability.
Valuation: IREN Trades Above Industry at Present
IREN shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, IREN is trading at 4.68X compared with the Zacks Financial Miscellaneous Services industry’s 2.59X.
IREN Forward 12 Months (P/S) Valuation Chart
Image Source: Zacks Investment Research
Key Technical Indicator Signals Bearish Trend for IREN
IREN shares have dipped below their 50-day & 200-day moving averages, a bearish technical signal that indicates the potential for continued downward pressure in the short term.
IREN 50-Day & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Despite the above-mentioned challenges, it’s not all doom and gloom for IREN.
AI Cloud Momentum Boosts IREN’s Prospects
IREN is increasing its AI cloud capacity to 150,000 graphics processing units (GPUs), which management believes is the key to support its target of more than $3.7 billion in AI cloud annualized run-rate (ARR) revenues by the end of 2026. IREN's latest expansion includes a purchase agreement of more than 50,000 NVIDIA B300 GPUs. This expands the company’s total GPU fleet to 150,000 GPUs. These GPUs are expected to be deployed in Mackenzie, British Columbia and Childress, TX, using IREN’s existing air-cooled data center capacity.
The company plans to deploy the GPUs in phases during the second half of 2026. The target looks possible because IREN already has a good amount of AI cloud revenues under contract. During its fiscal second-quarter 2026 earnings call, management said the company had about $2.3 billion of annualized revenue run rate under contract. This includes the Microsoft (MSFT - Free Report) deal and about $0.4 billion of contracted revenues at Prince George's. Management also said customer demand remains strong and that the company is in multiple advanced talks for large-scale deployments.
IREN also looks better placed from a funding point of view. The company said it has secured $9.3 billion of funding over the past eight months through customer prepayments, convertible notes, GPU leasing and GPU financing. This matters because AI cloud expansion needs heavy spending upfront. In the second quarter of fiscal 2026, IREN secured $3.6 billion in GPU financing and received $1.9 billion from Microsoft in customer prepayments, which together cover about 95% of the GPU-related capital spending tied to the Microsoft contract.
For the latest GPU orders, IREN expects about $3.5 billion of additional capex, including GPUs, servers, storage, networking, labor and other related equipment. For now, the target depends on execution. IREN's ability to deploy these GPUs on time, sign more customer contracts and ramp customer workloads through the second half of 2026 will be the key to hitting the target of $3.7 billion in AI cloud revenues by 2026.
Conclusion: Hold IREN Stock Right Now
IREN’s focus on moving into AI cloud services is showing good early results, and the company has strong contracts, funding support and enough power capacity to grow over time. However, near-term risks from lower bitcoin mining revenues, along with intense competition in the AI infrastructure space from already-established players, such as Applied Digital and TeraWulf, multiply competition for IREN, and a premium valuation warrants a cautious approach to the stock.
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IREN Limited Plunges 23% in 3 Months: Time to Hold or Fold the Stock?
Key Takeaways
IREN Limited (IREN - Free Report) shares have plunged 23.1% over the past three months, underperforming the broader Zacks Finance sector and the Financial - Miscellaneous Services industry’s decline of 7.6% and 21.7%, respectively.
IREN has also underperformed industry peers, including Applied Digital (APLD - Free Report) and TeraWulf (WULF - Free Report) . In the past three months, shares of Applied Digital have plunged 20.9%, while TeraWulf shares have gained 21.5%.
This underperformance raises the question: Should investors cut their losses and exit, or is it worth holding IREN stock?
3-Month Price Return Performance
Image Source: Zacks Investment Research
Lower Bitcoin Mining Revenues Hurt IREN’s Prospects
IREN is seeing near-term pressure on revenues as it moves away from Bitcoin mining and focuses more on AI cloud services. IREN’s focus on no longer being a pure-play crypto-mining company while evolving into an AI Cloud Service Provider means that the company will continue to see lower revenues from its bitcoin mining business on a quarter-on-quarter basis.
In the second quarter of fiscal 2026, total revenues fell 23% from the previous quarter. Management said this drop was mainly due to lower Bitcoin mining revenues, which declined 28.2% on a sequential basis in the second quarter of fiscal 2026.
IREN is shifting power and infrastructure away from mining and toward AI workloads. AI cloud revenues are increasing, but they are not yet large enough to fully make up for the drop in mining revenues. Management said this pressure should be temporary. As more GPUs are installed and AI cloud contracts ramp up, AI revenues are expected to become the main source of revenue. Until then, quarter-over-quarter results for Bitcoin mining revenues may remain uneven.
The Zacks Consensus Estimate for IREN’s Bitcoin mining revenues for the third quarter of fiscal 2026 is pegged at $139.6 million, which implies another sequential decline of 16.6%.
IREN Stock Faces Stiff Competition
While the AI data center market provides a strong growth outlook, solid competition from already-established players, such as Applied Digital and TeraWulf, multiplies competition for IREN.
In January 2026, Applied Digital announced that it had started construction on Delta Forge 1, a large AI data center campus in a southern U.S. state. Delta Forge 1 is designed to support up to 430 megawatts (MW) of total utility power in its initial phase. This can support up to 300 MW of critical IT load. Here, APLD’s goal is to turn available power into usable, high-density AI capacity for large customers and is designed to scale with customer demand while providing reliable performance.
In February 2026, TeraWulf announced the expansion of its digital and power infrastructure portfolio through the acquisition of two existing sites in Kentucky and Maryland. Together, these two acquisitions add about 1.5 GW of power capacity to the company’s portfolio. WULF plans to add 250 to 500 MW of new contracted capacity each year, depending on customer demand and power availability.
Valuation: IREN Trades Above Industry at Present
IREN shares are overvalued, as suggested by the Value Score of F. In terms of forward price/sales, IREN is trading at 4.68X compared with the Zacks Financial Miscellaneous Services industry’s 2.59X.
IREN Forward 12 Months (P/S) Valuation Chart
Image Source: Zacks Investment Research
Key Technical Indicator Signals Bearish Trend for IREN
IREN shares have dipped below their 50-day & 200-day moving averages, a bearish technical signal that indicates the potential for continued downward pressure in the short term.
IREN 50-Day & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Despite the above-mentioned challenges, it’s not all doom and gloom for IREN.
AI Cloud Momentum Boosts IREN’s Prospects
IREN is increasing its AI cloud capacity to 150,000 graphics processing units (GPUs), which management believes is the key to support its target of more than $3.7 billion in AI cloud annualized run-rate (ARR) revenues by the end of 2026. IREN's latest expansion includes a purchase agreement of more than 50,000 NVIDIA B300 GPUs. This expands the company’s total GPU fleet to 150,000 GPUs. These GPUs are expected to be deployed in Mackenzie, British Columbia and Childress, TX, using IREN’s existing air-cooled data center capacity.
The company plans to deploy the GPUs in phases during the second half of 2026. The target looks possible because IREN already has a good amount of AI cloud revenues under contract. During its fiscal second-quarter 2026 earnings call, management said the company had about $2.3 billion of annualized revenue run rate under contract. This includes the Microsoft (MSFT - Free Report) deal and about $0.4 billion of contracted revenues at Prince George's. Management also said customer demand remains strong and that the company is in multiple advanced talks for large-scale deployments.
IREN also looks better placed from a funding point of view. The company said it has secured $9.3 billion of funding over the past eight months through customer prepayments, convertible notes, GPU leasing and GPU financing. This matters because AI cloud expansion needs heavy spending upfront. In the second quarter of fiscal 2026, IREN secured $3.6 billion in GPU financing and received $1.9 billion from Microsoft in customer prepayments, which together cover about 95% of the GPU-related capital spending tied to the Microsoft contract.
For the latest GPU orders, IREN expects about $3.5 billion of additional capex, including GPUs, servers, storage, networking, labor and other related equipment. For now, the target depends on execution. IREN's ability to deploy these GPUs on time, sign more customer contracts and ramp customer workloads through the second half of 2026 will be the key to hitting the target of $3.7 billion in AI cloud revenues by 2026.
Conclusion: Hold IREN Stock Right Now
IREN’s focus on moving into AI cloud services is showing good early results, and the company has strong contracts, funding support and enough power capacity to grow over time. However, near-term risks from lower bitcoin mining revenues, along with intense competition in the AI infrastructure space from already-established players, such as Applied Digital and TeraWulf, multiply competition for IREN, and a premium valuation warrants a cautious approach to the stock.
Currently, IREN carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.