Analysts at Bernstein have sharply raised their price target for IREN to $125, up from $75, after the bitcoin miner-turned-AI infrastructure company secured a $9.7 billion cloud computing deal with Microsoft.
The analysts, led by Gautam Chhugani, reiterated their outperform rating, saying the partnership cements IREN’s evolution into a vertically integrated AI cloud provider with one of the largest owned power portfolios in the industry. Their note, titled “Own power, get a $9.7 billion Microsoft deal,” highlighted IREN’s ability to leverage its energy assets to capture AI-driven growth.
IREN LimitedA Major Milestone in AI Infrastructure
Under the five-year contract, IREN will supply 200 megawatts (MW) of GPU-powered data center capacity from its facility in Childress, Texas. Bernstein estimates this could generate $2 billion in recurring annual revenue by 2027.
Microsoft has agreed to prepay 20% of the deal’s total value, or about $1.94 billion, which will help finance IREN’s planned $8.8 billion capital expenditure. That includes around $5.8 billion in GPUs sourced through Dell Technologies and $3 billion in data center construction costs. The analysts expect IREN to cover remaining costs through a mix of convertible debt and traditional financing.
The Power of Owning Power
Bernstein emphasized that IREN’s key advantage lies in its control over its energy infrastructure. Unlike newer “neocloud” competitors such as CoreWeave, which rely on colocation partners, IREN owns and operates its 2.9 gigawatts (GW) of power capacity across Texas and British Columbia.
This ownership model gives IREN the flexibility to expand quickly in response to customer demand and helps preserve margins. Bernstein projects that this structure could deliver 10–15% higher operating margins than hosted cloud operators.
Valuing the AI Pivot
Using a sum-of-parts valuation, Bernstein now values IREN’s AI cloud business at $28.5 billion, based on 14x projected 2027 EBITDA. They expect AI-related revenue to reach $2.5 billion by the end of 2027, with EBITDA margins near 85%—a figure supported by IREN’s low-cost power access and direct control of infrastructure.
Although bitcoin mining now accounts for only 6% of IREN’s total enterprise value, the segment still produces roughly $620 million in annualized EBITDA, giving the company a steady internal cash flow to fund its AI expansion.
Market Reaction and Broader Context
Following the Microsoft announcement, IREN’s stock surged nearly 30% in pre-market trading on Monday before closing up 11.5% at $67.75. Shares slipped about 6% on Tuesday to $63.70, but remain up more than 550% year-to-date, according to TradingView.
The deal highlights a growing trend among bitcoin miners shifting into AI infrastructure, capitalizing on their access to cheap power and existing data center capacity. While traditional mining chips can’t handle AI workloads, these firms’ energy resources are increasingly attractive to tech giants racing to expand GPU capacity.
Importantly, the Microsoft contract uses only 10% of IREN’s total power portfolio, suggesting room for similar partnerships with other major cloud providers.
“This deal reaffirms that bitcoin miners are in a uniquely strong position due to their access to power in a constrained market,” Chhugani said. “IREN has a long runway for growth with its 2.9GW pipeline and status as NVIDIA’s preferred partner.”
