IREN Limited — the AI-focused data‑center operator formerly known as Iris Energy — is back in the spotlight today after reporting record fiscal Q1 FY26 results last night and riding momentum from a $9.7 billion, five‑year AI cloud contract with Microsoft announced earlier this week. Shares are volatile in Friday trading even as Compass Point doubled its price target to $105 on the company’s hyperscale AI build‑out. [1]
What’s new today (Nov. 7)
- Record quarter: For the three months ended Sept. 30, 2025, IREN reported revenue of $240.3 million (up 355% year over year) and net income of $384.6 million (vs. a $51.7 million loss a year ago). Adjusted EBITDA was $91.7 million. Management noted that the outsized net income reflects unrealized gains tied primarily to convertible‑notes hedges. [2]
- Analyst action: Compass Point lifted its IREN target price from $50 to $105 and reiterated Buy, citing power, partners and capital in place to scale AI Cloud; it highlighted the Microsoft deal plus new customers Together AI, Fluidstack, and Fireworks AI. [3]
- Market reaction: As of mid‑day, IREN trades around $60–61 after wide intraday swings (high ~$70.83, low ~$59.64). Yesterday’s run‑up briefly pushed shares above the average 12‑month analyst target of $69.50, drawing attention to potential estimate resets. [4]
The Microsoft catalyst: $9.7B over five years
On Nov. 3, IREN announced a $9.7 billion AI cloud services contract with Microsoft. Under the agreement, IREN will supply access to NVIDIA GB300 GPUs over a five‑year term, with 20% customer prepayment. Hardware will be sourced via a separate $5.8B agreement with Dell, and deployed at IREN’s Childress, Texas campus — including new liquid‑cooled data centers totaling ~200 MW of critical IT load. Reuters reports the contract can be terminated if milestones aren’t met, underscoring execution risk. [5]
Earnings snapshot: where growth is coming from
- Revenue mix (Q1 FY26):
- Bitcoin mining: $232.9M
- AI Cloud services: $7.3M
While AI Cloud is nascent in the P&L, management is targeting $3.4B of AI Cloud ARR by end‑2026 on expansion to ~140,000 GPUs, aided by Microsoft and additional multi‑year contracts (Together AI, Fluidstack, Fireworks AI). [6]
- Balance sheet & funding: $1.8B cash (Oct. 31), $1.0B zero‑coupon convertible notes issued Oct. 14, and $400M of cumulative GPU financing secured; management expects near‑term capex to be covered by existing cash, operating flows, Microsoft prepayments, and additional financing initiatives. [7]
- Build‑out milestones:
- Childress (750 MW): Accelerating “Horizon 1–4” liquid‑cooled data centers for Microsoft; design work underway to potentially convert the entire campus to liquid‑cooled AI deployments.
- British Columbia (160 MW): Transitioning from ASICs to GPUs by end‑2026.
- Sweetwater Hub (2 GW): Substation energization by April 2026 (Sweetwater 1) and late 2027 (Sweetwater 2). [8]
Context: Coverage this morning emphasizes that IREN’s profitability inflection is driven by both stronger bitcoin mining and the anticipated AI ramp; CoinDesk also flags the new AI contracts and the company’s ARR ambition. [9]
Wall Street and trading color
- Target hike: Compass Point’s new $105 target reflects confidence in IREN’s power pipeline and partner ecosystem to scale AI capacity through 2026. [10]
- Beat or miss?: Some outlets frame Q1 as a beat on revenue and EPS versus consensus; others highlight a mixed read‑through with shares under pressure on Friday. These divergent takes reflect differing estimate sets/timeframes, as well as the non‑cash items within EPS. [11]
- Volatility watch: After this week’s surge on the Microsoft news, shares briefly topped the average 12‑month target yesterday before pulling back today, a typical pattern around high‑profile contract headlines. [12]
Why this matters
Microsoft’s pre‑commitment gives IREN line‑of‑sight to scaled GPU deployments and prepaid cash inflows that can offset capex and accelerate the AI Cloud mix. Strategically, the deal validates the “neocloud” model — specialized providers leveraging power access and purpose‑built infrastructure to supply AI compute — and puts IREN alongside hyperscale‑adjacent capacity players in the AI arms race. [13]
Risks & execution checks
- Milestone risk: The Microsoft contract includes delivery‑milestone provisions; missing them could jeopardize economics. [14]
- P&L optics: Q1’s net income was boosted by unrealized gains on financial instruments tied to convertibles; investors should focus on Adjusted EBITDA and cash metrics as AI revenue ramps. [15]
- Power & timelines: AI capacity targets depend on staged energizations and liquid‑cooled build‑outs at Childress and Sweetwater, plus the BC GPU transition. Any slippage would push out ARR timing. [16]
What to watch next (dates & milestones)
- Childress Horizon 1–4 liquid‑cooled deployments throughout 2026; 200 MW of AI data‑center capacity tied to Microsoft. [17]
- British Columbia conversion from ASICs to GPUs by end‑2026. [18]
- Sweetwater 1 substation energization April 2026; Sweetwater 2late 2027. [19]
- Continued customer adds beyond Microsoft (Together AI, Fluidstack, Fireworks AI) to underpin the $3.4B AI Cloud ARR target. [20]
Bottom line
On Nov. 7, 2025, IREN is executing on a dual narrative: a still‑powerful bitcoin mining engine and a rapidly scaling AI Cloud business now anchored by a $9.7B Microsoft deal. The quarter’s headline profitability and balance‑sheet firepower position the company for an aggressive 2026 build‑out — but investors should track delivery milestones, energization dates and mix shift toward recurring AI cloud revenue to gauge how quickly the story converts into durable cash flow. [21]
Sources
- Company press release (Nov. 6, 2025) with full Q1 FY26 results, project milestones and ARR targets. [22]
- Microsoft contract announcement (Nov. 3, 2025) detailing term, prepayment, Dell procurement and Childress deployment plan. [23]
- Reuters (Nov. 3, 2025) on the $9.7B Microsoft deal, GPU details, Dell tie‑up and milestone contingencies. [24]
- CoinDesk (Nov. 7, 2025) on record quarter and new AI customers (Together AI, Fluidstack, Fireworks AI). [25]
- Investing.com (Nov. 7, 2025) on Compass Point’s $105 target hike. [26]
- Nasdaq.com (Nov. 6, 2025) noting shares crossing above average 12‑month target price. [27]
Disclaimer: This article is for informational purposes only and is not investment advice. Always do your own research and consider consulting a licensed financial adviser.
References
1. www.globenewswire.com, 2. www.globenewswire.com, 3. de.investing.com, 4. www.nasdaq.com, 5. www.globenewswire.com, 6. www.globenewswire.com, 7. www.globenewswire.com, 8. www.globenewswire.com, 9. www.coindesk.com, 10. de.investing.com, 11. www.gurufocus.com, 12. www.nasdaq.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.globenewswire.com, 16. www.globenewswire.com, 17. www.globenewswire.com, 18. www.globenewswire.com, 19. www.globenewswire.com, 20. www.globenewswire.com, 21. www.globenewswire.com, 22. www.globenewswire.com, 23. www.globenewswire.com, 24. www.reuters.com, 25. www.coindesk.com, 26. de.investing.com, 27. www.nasdaq.com
