Just over a year ago, investors largely viewed IREN (IREN) as a bitcoin mining company. Today, the company supplies AI infrastructure to Microsoft (MSFT) and signs billion-dollar contracts with some of the biggest names in the AI market, including Nvidia (NVDA) and Dell Technologies (DELL). These developments provide evidence that IREN’s shift toward AI infrastructure is translating into actual business activity, and the market has responded strongly to that progress. IREN shares have been rewarded with two strong moves over the last two months.

The Microsoft Deal That Changed Everything

IREN’s AI transformation centers on a major five-year agreement with Microsoft. The company entered into a $9.7 billion cloud services agreement with Microsoft, with 20% of the contract value paid upfront. Once fully commissioned, the deal is expected to generate nearly $1.94 billion in annualized run-rate revenue. That gives IREN a significant source of contracted business as it builds out its AI cloud operations.

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The key point is that the agreement is already translating into real infrastructure. The company has completed and delivered the first of four planned “Horizon” AI cloud deployments for Microsoft. The deployment is a 50-megawatt liquid-cooled installation at IREN’s Childress, Texas campus. Nvidia has also granted IREN Exemplar Cloud status after testing the deployment’s GB300 NVL72 setup. That validation is important because it shows Nvidia has tested IREN’s infrastructure and confirmed its ability to support demanding AI workloads.

IREN’s planned capacity expansion shows just how quickly its business is changing, growing from roughly 3 megawatts of AI cloud capacity a year ago to 480 megawatts being delivered in 2026. The neocloud is targeting 1.2 gigawatts by 2027, which would amount to more than a hundredfold growth in capacity over about two years. Importantly, the expansion is already backed by a committed timeline.

At the same time, the company is building a revenue base that goes well beyond Microsoft. After securing $2.8 billion in new contracts, IREN raised its year-end 2026 annualized revenue target to more than $4 billion. Around 85% of that revenue target is already covered by signed contracts. The customer list has also expanded to include Together AI, Nvidia, Figure AI, Perplexity, and Fluidstack.

Delivery and Contracts, Back-to-Back

IREN received two major catalysts within just a few weeks, giving investors fresh evidence that its AI infrastructure strategy is gaining traction. The first came when the company announced $2.8 billion in new multi-year contracts with AI developers. The new agreements pushed its annualized revenue target above $4 billion, with approximately 85% already under contract. Customer prepayments are also expected to cover about 45% of the GPU spending associated with those contracts.

Investors pushed the stock nearly 8% higher after the news broke. Days later, IREN confirmed the delivery and acceptance of Horizon 1 by Microsoft. The announcement sent shares another 6% higher in premarket trading. The two announcements tell a similar story from different angles. The company is delivering the infrastructure it promised, and new customer commitments are continuing to support the next stage of its expansion.

The delivery of Horizon 1 marks an important step, but the company still has three more phases ahead. The next major test will be whether Horizon 2 through Horizon 4 are delivered according to schedule. Investors will also be watching contract activity closely.

About IREN Stock

IREN was founded in 2018 and is headquartered in Sydney, Australia, where it operates in the data center market. It owns the land, power infrastructure, buildings, and cooling systems needed to run these facilities, while providing the computing equipment, including GPUs, servers, storage, and networking, along with software and support services that help customers run AI applications. The company is also involved in Bitcoin mining through the operation of a peer-to-peer network of computers running the Bitcoin software.

Over the last 12 months, IREN stock has increased nearly 12%, slightly underperforming the S&P 500 ($SPX), which rose approximately 14% during the same period. The modest underperformance appears to be tied to IREN’s ongoing transition from Bitcoin mining to AI infrastructure. While AI Cloud Services revenue surged nearly eightfold in fiscal 2026, the company also recorded a $702.6 million net loss, largely driven by $638.8 million in non-cash impairment charges related to retiring Bitcoin mining equipment.

IREN’s AI Opportunity Is Growing, but So Is Its Spending Bill

IREN reported its fourth-quarter fiscal 2026 earnings on August 27. The company’s revenue rose to $137.2 million as its AI cloud business continued to grow, but the result fell short of Wall Street’s estimate of $157.14 million. It reported a net loss of $684 million, driven largely by non-cash impairments tied to the planned exit from bitcoin mining. On the run-rate shift toward AI cloud, CFO Anthony Lewis said the company exited Q4 at roughly $0.5 billion of ARR. Moreover, the company continues to sign long-term cloud computing agreements with AI companies, including Cohere, Perplexity, Figure AI, and Fal AI.

Looking forward, management gave a very ambitious outlook for the next year. The company expects more than $4 billion of ARR by the December quarter, up from about $500 million at the end of Q4. However, the figure excludes approximately $700 million of ARR tied to its Nvidia cloud contract that is expected to ramp in 2027. Capital spending is set to remain heavy, with IREN guiding fiscal 2027 CapEx to $25 billion to $30 billion. That covers Microsoft capacity, other deployments tied to 2026 ARR targets, air-cooled deployments, and new liquid-cooled capacity.

What Do Analysts Expect for IREN Stock?

Analysts remain positive, as the stock received “Buy” ratings from various analysts in the first two weeks of September. On Sept. 14, J.P. Morgan analyst Richard Choe upgraded IREN to “Buy” and assigned a price target of $65, reflecting 54% upside from current levels. Similarly, BTIG analyst Gregory Lewis reiterated a Buy rating on IREN with a price target of $80, which implies further 90% upside from the current share price level.

Based on 14 Wall Street analysts covering the stock, IREN holds a consensus “Strong Buy” rating. Of those, 12 have a “Strong Buy” rating, and three have a “Hold” rating. The stock has a median price target of $77, which reflects 83% upside from the current share price.

On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com