IREN's AI Cloud Pivot Drives 82.63% Upside Potential

IREN has undergone significant changes in its business model, shedding its identity as a Bitcoin miner. The company's AI Cloud revenue more than doubled to $71 million in the latest quarter, while it secured a $2.4 billion financing deal with Blue Owl-managed funds for an AI factory. IREN's contracted ARR stands at $4 billion, backed by major deals with Microsoft and NVIDIA.

The company's balance sheet appears cleaner compared to its peers, CoreWeave, despite having half the market capitalization. The bear case suggests execution risks, including a debt-to-equity ratio of 1.87 and an operating margin of -148%. However, operating cash flow was $1.81 billion in Q4, and adjusted EBITDA margin ran at 41% in Q2 FY26.

The bull case is driven by the potential for IREN to deliver on its contracted revenue, with a target price of $84.29 implied by a 24/7 Wall St. analyst. This represents an upside potential of 82.63%. The company's ability to scale GPU capacity across four continents and meet customer demands from Microsoft and NVIDIA will be crucial in achieving this target.