IREN Reorients Growth Path with Microsoft Pact Targeting AI-Compute Infrastructure

Deal validation and immediate liquidity

• The stock jumped more than 13% on the news last Friday, driven by the confirmed five-year Microsoft contract for AI-focused cloud services.
• A notable feature of the arrangement is an upfront payment of roughly $1.9 billion. This cash inflow immediately strengthens IREN’s liquidity and is seen as a strong vote of confidence in the company’s transition from crypto to advanced computing.

Funding the expansion through a capital raise

Should investors sell immediately? Or is it worth buying IREN?

• In the wake of the positive development, IREN filed for a capital increase via a Shelf Registration on Sunday. The plan calls for issuing 17.5 million new shares to raise as much as $661 million.
• Although this will dilute current shareholders, the funds are earmarked for scaling up the company’s infrastructure. Specifically, capital is intended for the Childress, Texas site to deliver the contracted 200 MW capacity for Microsoft.

Shifting from Bitcoin volatility to AI-enabled stability

• The strategic shift is aggressive and designed to steady earnings. IREN plans to convert its secured 3 gigawatts of power capacity toward AI cloud computing rather than Bitcoin mining, aiming for a more predictable revenue stream.
• By the end of 2026, the company targets roughly 140,000 GPUs in operation. The Microsoft agreement is expected to substantially lower the speculative risk tied to the crypto mining model and offer durable, recurring revenue streams.

Market actions and near-term metrics

• Closing price on Friday: $42.70
• Performance over the last seven days: +8.35%
• Distance to the 52-week high: -35.80%

Execution risks and what investors will watch

• Despite the upbeat mood, the partnership comes with milestones that must be met for timely execution. Delays in construction or hardware procurement could trigger penalties or renegotiations under the Microsoft contract.
• Investors will focus on whether IREN can achieve the projected 85% project margins in its AI business to offset the dilution from the new equity issue and deliver the anticipated returns.