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IREN Limited Eyes AI Cloud Growth Amid Underused Power Capacity, Jefferies Issues Buy
IREN Limited (NASDAQ: IREN), once known as Iris Energy, has captured fresh investor interest after Jefferies launched coverage with a Buy rating and a $79 price target. The brokerage cited the company’s sizable renewable‑powered power portfolio and a new five‑year, $9.7 billion contract with Microsoft as key catalysts.
Jefferies’ thesis hinges on the fact that IREN controls roughly 6 GW of global power capacity yet is using only about 10 % of it. The firm estimates that the company’s AI‑cloud services business will generate higher returns than its traditional data‑center leasing model, and argues that the market has not yet priced that potential in.
The company’s power footprint is split between operational and under‑construction sites. Of the 4.5 GW of secured capacity, 810 MW is currently online, while 2,100 MW is under construction. In addition, IREN recently completed the acquisition of Nostrum Group, adding about 490 MW of capacity in Europe, and announced plans for an 800 MW campus in Australia.
Microsoft’s deal is a cornerstone of IREN’s transition from cryptocurrency mining to AI infrastructure. The five‑year agreement, announced in 2024, is valued at approximately $9.7 billion and will see IREN deliver GPU cloud infrastructure powered by NVIDIA’s GB300 GPUs. Jefferies projects that the Microsoft contract will contribute roughly $1.9 billion in annual revenue, pushing the company’s total annual recurring revenue (ARR) potential to around $3.1 billion.
IREN’s own forecasts for its AI cloud services are ambitious. The brokerage projects that GPU deployments alone could reach an annualized run‑rate revenue exceeding $500 million by early 2026. The company’s current AI cloud revenue, however, is still in the early stages; a recent earnings recap noted that the segment generated just $7.3 million in the first quarter of fiscal 2026.
The company’s stock has reflected the optimism surrounding its pivot. Over the past year, IREN’s share price has surged nearly 500 %, driven in part by the dual exposure to cryptocurrency mining and AI infrastructure.
IREN is not the only player in the AI cloud space. CoreWeave and Nebius are also competing for hyperscaler contracts and enterprise AI workloads. Jefferies stresses that the distinction between AI cloud services and traditional colocation is central to its thesis. Leasing data‑center space is a low‑margin business, whereas owning and operating GPUs to sell compute directly to customers offers higher margins but also higher capital and operational complexity.
Execution risk remains significant. The gap between the 810 MW operational capacity and the 4,500 MW secured capacity is where the bull case lives, and it is also where execution risk concentrates. Investors will likely focus on three metrics: the pace of converting secured power to operational capacity, the ramp rate of AI cloud revenue against the $500 million target, and whether additional hyperscaler contracts follow the Microsoft deal.
In summary, Jefferies believes that IREN’s underutilized renewable power base and its growing AI cloud portfolio position the company for substantial upside. The firm’s $79 price target represents a 30‑36 % upside from recent trading levels near $58. Whether IREN can accelerate its transition from Bitcoin mining to a profitable AI cloud provider remains to be seen, but the company’s recent contracts and capacity expansion signal a clear strategic shift.
The next few quarters will be critical for IREN as it seeks to convert its power assets into productive AI compute, secure further hyperscaler agreements, and demonstrate that its higher‑margin AI cloud model can deliver the projected revenue growth.
Jefferies’ thesis hinges on the fact that IREN controls roughly 6 GW of global power capacity yet is using only about 10 % of it. The firm estimates that the company’s AI‑cloud services business will generate higher returns than its traditional data‑center leasing model, and argues that the market has not yet priced that potential in.
The company’s power footprint is split between operational and under‑construction sites. Of the 4.5 GW of secured capacity, 810 MW is currently online, while 2,100 MW is under construction. In addition, IREN recently completed the acquisition of Nostrum Group, adding about 490 MW of capacity in Europe, and announced plans for an 800 MW campus in Australia.
Microsoft’s deal is a cornerstone of IREN’s transition from cryptocurrency mining to AI infrastructure. The five‑year agreement, announced in 2024, is valued at approximately $9.7 billion and will see IREN deliver GPU cloud infrastructure powered by NVIDIA’s GB300 GPUs. Jefferies projects that the Microsoft contract will contribute roughly $1.9 billion in annual revenue, pushing the company’s total annual recurring revenue (ARR) potential to around $3.1 billion.
IREN’s own forecasts for its AI cloud services are ambitious. The brokerage projects that GPU deployments alone could reach an annualized run‑rate revenue exceeding $500 million by early 2026. The company’s current AI cloud revenue, however, is still in the early stages; a recent earnings recap noted that the segment generated just $7.3 million in the first quarter of fiscal 2026.
The company’s stock has reflected the optimism surrounding its pivot. Over the past year, IREN’s share price has surged nearly 500 %, driven in part by the dual exposure to cryptocurrency mining and AI infrastructure.
IREN is not the only player in the AI cloud space. CoreWeave and Nebius are also competing for hyperscaler contracts and enterprise AI workloads. Jefferies stresses that the distinction between AI cloud services and traditional colocation is central to its thesis. Leasing data‑center space is a low‑margin business, whereas owning and operating GPUs to sell compute directly to customers offers higher margins but also higher capital and operational complexity.
Execution risk remains significant. The gap between the 810 MW operational capacity and the 4,500 MW secured capacity is where the bull case lives, and it is also where execution risk concentrates. Investors will likely focus on three metrics: the pace of converting secured power to operational capacity, the ramp rate of AI cloud revenue against the $500 million target, and whether additional hyperscaler contracts follow the Microsoft deal.
In summary, Jefferies believes that IREN’s underutilized renewable power base and its growing AI cloud portfolio position the company for substantial upside. The firm’s $79 price target represents a 30‑36 % upside from recent trading levels near $58. Whether IREN can accelerate its transition from Bitcoin mining to a profitable AI cloud provider remains to be seen, but the company’s recent contracts and capacity expansion signal a clear strategic shift.
The next few quarters will be critical for IREN as it seeks to convert its power assets into productive AI compute, secure further hyperscaler agreements, and demonstrate that its higher‑margin AI cloud model can deliver the projected revenue growth.
