IREN's AI Pivot Leaves Investors Wary of Funding Gap

IREN, a company that started as an Australian bitcoin miner, is struggling to fund its pivot to AI data centers. The company's stock has dropped nearly 50% from its all-time high, with investors arguing over whether its bet on AI is a breakthrough or an overreach. IREN has $13.81 billion in capital commitments, but only $7.62 billion in cash and restricted cash, a gap of $6.19 billion.

The company has signed two major contracts with Microsoft and Nvidia, worth $9.7 billion and $3.4 billion respectively, to supply Nvidia GB300 GPUs out of its Horizon data centers in Texas. IREN's own target is $4 billion in annualized AI Cloud revenue by the end of this year, up from an earlier goal of $3.7 billion.

However, the company's funding model is under scrutiny, with some analysts questioning whether it can execute a $25 billion to $30 billion buildout without diluting shareholders. IREN has filed to allow up to $6 billion in additional share issuance, which would expand the share count by as much as 37.5%.