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IREN Limited (NASDAQ:IREN) told investors on August 27 that its 2026 AI capacity is largely sold out and carries about $4 billion of contracted annualized run-rate revenue. The stock fell the next day. H.C. Wainwright responded by reiterating a Buy rating and a $90 target, creating the sort of contradiction that deserves a closer look before investors treat the selloff as a verdict.
The operating transition is moving rather quickly. IREN said AI Cloud Services revenue reached $70.5 million in the June quarter, more than double the prior quarter, while full-year AI Cloud revenue rose roughly eightfold to $128.8 million. It also signed a new multi-year contract with a leading frontier AI lab and said Horizon 1, the first of four 50-megawatt liquid-cooled deployments for Microsoft, was delivered August. Current operating ARR is about $1 billion.
The attraction is obvious in that IREN Limited (NASDAQ:IREN) spent years acquiring power and data-center sites as a Bitcoin miner, then repurposed that scarce infrastructure into AI compute. Recent three-year contracts exceed $20 million of revenue per IT megawatt, according to management. Customer prepayments and GPU financing can cover much of the hardware bill, including a new $2.8 billion financing package that funds about 90% of associated GPU capex.
But the headline $4 billion figure needs discipline. IREN defines ARR as an operating metric based on contracted GPU-hour pricing and says recognized GAAP revenue may be materially lower. Capacity still has to be commissioned, tested and accepted by customers. The company reported a $684 million quarterly net loss, heavily affected by non-cash impairment charges as old mining hardware is retired, while adjusted EBITDA fell to $19.2 million. The business is scaling into large capital requirements before its AI revenue base fully arrives. That makes utilization, contract durability and financing costs just as important as the eye-catching ARR number over the next several quarters.
The latest readily verifiable Insider Monkey count showed 69 hedge funds holding IREN at the end of Q2, up from 53 in the prior quarter. Q2 filings show Value Aligned Research Advisors increasing its position 78% to about 8.47 million shares, while Situational Awareness cut its stake 20% to roughly 9.47 million shares. Short interest was unusually heavy on August 14 at about 94.25 million shares, or 27.77% of float, with 2.2 days to cover. That makes IREN one of the clearest battlegrounds in AI infrastructure: huge contracted economics on one side, equally huge financing and execution demands on the other.
Source: finance.yahoo.com