IREN's $25B AI Buildout May Have Spooked Investors, Bernstein Says

Bernstein sees overlooked gains in IREN's AI pivot

IREN announced plans to spend between $25 billion and $30 billion on its AI cloud business in fiscal 2027. The large number may have frightened investors, but analysts at Bernstein say the market is missing improving profit margins in the company's new computing sector.

IREN recently shared its fiscal 2026 financial results. The company reported a net loss of $702.6 million, which is a shift from the $86.9 million net income it made in 2025. This change is partly due to writing down the value of old bitcoin mining equipment that was retired to make room for AI cloud infrastructure.

Key numbers behind the buildout

• IREN expects to spend $25 billion to $30 billion on capital expenditures in fiscal 2027.
• The company secured $4 billion in contracted cloud annual recurring revenue for its 2026 capacity.
• Recent three-year contracts bring in more than $20 million in annual revenue per IT megawatt.
• Payback time for GPU investments has dropped to about two years, down from three years under a previous Microsoft deal.
• IREN shares fell 6.3% to $37.96 in pre-market trading after the report.

What the analysts are saying

Analysts led by Gautam Chhugani at Bernstein argued that investors are ignoring better unit economics. They noted that while the total spending number is huge, the return on each dollar invested is getting faster. IREN now has $1 billion in operating cloud revenue and another $4 billion locked into contracts for its nearly sold-out 2026 capacity.

The firm maintains an Outperform rating on the stock with a $100 price target, suggesting significant upside from Thursday's closing price of $40.53. Bernstein also highlighted that IREN has raised $19 billion over the last year through customer payments, debt, and equity sales to fund the expansion.

Why the shift matters for crypto miners

IREN is one of several bitcoin miners scaling back traditional mining to focus on high-performance computing for AI. This move comes as grid connection times for new U.S. data centers now average around five years, according to CoinShares. Miners like IREN that already have access to power can repurpose their existing sites faster than new competitors building from scratch.

What is confirmed and what is unclear

It is confirmed that IREN posted a net loss for fiscal 2026 and is raising funds for a massive AI buildout. It is also confirmed that revenue from AI cloud services jumped nearly eightfold to $128.8 million. However, exact details on how many new customers will sign deals at the higher $25 million per megawatt rate remain part of ongoing discussions.

What happens next

IREN is in advanced talks to fill most of its 2027 capacity and has started early conversations for 2028. The company plans to continue using a mix of operating cash flow, financing, and prepayments to cover its expansion costs.

Sources

• The Block