IREN's AI Cloud Transformation: Why Market Overlooked a Strong Positive Signal

WhaleWatcher · 2026-02-22T19:17:12+00:00

IREN's stock dropped 18% post-earnings, primarily due to investor disappointment over a lack of new AI partnerships. Despite a decline in Bitcoin mining revenue, IREN's AI cloud business is growing rapidly, with annual contracts of $2.3 billion. Analysts remain optimistic about IREN's transformation and project a rise in AI cloud revenue to $3.4 billion by Q4 2026, signaling long-term growth potential.

WhaleWatcher

2026-02-22 19:17:12

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IREN faced a notable market correction after its latest earnings release, with shares declining roughly 18% to $39.79 per share according to PANews. However, the sell-off appears disconnected from the company’s operational momentum. Bernstein analysts identified the real culprit: investor disappointment stemming from the lack of new major AI partnership announcements, rather than any fundamental weakness in the business.

IREN’s AI Revenue Growth Overshadows Bitcoin Mining Decline

The stock decline masks a significant transformation taking place within IREN. While Bitcoin mining revenue experienced a quarter-on-quarter decrease—a metric that once dominated investor attention—the company’s cloud infrastructure business is accelerating dramatically. IREN’s AI cloud revenue more than doubled, with the company securing approximately $2.3 billion in annual recurring contracts tied to AI infrastructure services.

This expansion is particularly noteworthy given its scale. The $2.3 billion in current AI cloud contracts represents capacity equivalent to deploying around 140,000 GPUs. Bernstein analysts emphasized that fluctuations in crypto-mining earnings are no longer the central investment thesis for IREN; instead, the focus has shifted decisively toward the company’s progress in transitioning to AI cloud infrastructure as its core revenue driver.

IREN’s AI Ambitions Point to Substantial Growth Runway

The trajectory becomes even more compelling when examining IREN’s forward guidance. The company projects its AI cloud annual recurring revenue will reach $3.4 billion by the fourth quarter of 2026, representing meaningful incremental deployment of cloud GPU capacity. This growth pathway suggests that IREN is positioning itself at the intersection of two critical trends: enterprise demand for AI infrastructure and the shift away from legacy Bitcoin mining operations.

Bernstein analysts view the recent IREN stock decline as a market reset of expectations rather than a deterioration in execution capability. The investment bank maintains an “outperform” rating on IREN with a $125 price target, signaling confidence that current valuations present an attractive entry point for investors who recognize the long-term value creation potential in the company’s AI cloud transition.

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