Nvidia's AI Funding Boom Raises Valuation Concerns for IREN Stock

Mark Cuban warned that Nvidia is 'funding everyone' in the AI boom, and IREN stock proves his point. Nvidia has a significant stake in IREN through two main agreements. First, it holds an option to buy up to 30 million shares at $70 apiece over five years, worth up to $2.1 billion if exercised. Second, there's a cloud deal where IREN supplies Nvidia with GPU computing power for $3.4 billion over the same period.

This contract alone gives IREN a revenue floor of around $680 million per year for the next five years, making it a significant boost to the company's finances. However, IREN is still struggling financially, having spent $1.36 billion on hardware, property, and equipment in the last quarter, which is more than nine times its revenue.

The company has been filling this gap with outside funding, including an equity raise of up to $6 billion. Demand for AI infrastructure seems secure, but IREN's valuation ultimately rests on its ability to keep raising money long enough to stand on its own two feet.