‘Own power, get a $9.7B Microsoft deal’: Bernstein raises IREN price target to $125 following lucrative AI cloud contract

Bernstein analysts increased IREN's price target from $75 to $125, maintaining an outperform rating, following the announcement of a $9.7 billion AI infrastructure agreement with Microsoft. This deal solidifies IREN's transition into a vertically integrated AI cloud operator, leveraging its ownership of 2.9 GW of power infrastructure across Texas and British Columbia, which provides a competitive advantage over co-location peers.

Under the five-year contract, IREN will supply 200 MW of GPU-based data center capacity at its Childress, Texas site, expected to generate $2 billion in annual recurring revenue by 2027. Microsoft provided a $1.94 billion prepayment to help fund the estimated $8.8 billion in capital expenditure for GPUs and data center buildout, with IREN planning to raise the remaining capital through debt and convertibles.

Bernstein projects IREN's AI cloud revenues to hit $2.5 billion by 2027, supported by 10% to 15% higher operating margins due to low-cost power and direct infrastructure control. The firm values the AI cloud business at $28.5 billion, while the bitcoin mining segment contributes about 6% of the total enterprise value but generates internal cash for AI expansion.

(Source：The Block)