The race to deploy artificial intelligence infrastructure is heating up, and the companies that can secure computing capacity are the winners. One such company is IREN (IREN), which saw its shares soar after it announced that it had entered into a massive deal to procure GPUs that will increase its AI computing capacity significantly.
The company announced that it had entered into a deal to procure 50,000 units of the Nvidia (NVDA) B300 series of GPUs. This will increase its total computing capacity to over 150,000 GPUs. A significant development in an environment in which the demand for computing capacity continues to outstrip the available supply. This is a significant development for the company, which is a major player in the AI cloud infrastructure space. The company’s shares soared by nearly 13% after the announcement, reflecting the increased interest in companies that are building the infrastructure that will support the development of artificial intelligence systems.
About IREN Stock
IREN is an Australian-based company that is focused on the development of high-performance data centers that are powered by renewable energy. The company is focused on the development of AI cloud computing infrastructure. The company started out as a bitcoin mining company but has shifted focus to AI cloud computing infrastructure development.
The company has a market capitalization of $13.3 billion and is increasingly seen as a player in the race to deploy AI computing infrastructure. The company’s shares have been volatile over the last 12 months, with the company’s shares trading in the range of $5.13 to $76.87. Even though the company’s shares have retreated in the last few weeks, the company’s shares have provided spectacular returns over the last 12 months, with a Weighted Alpha of +243.83.
From a valuation standpoint, IREN trades at a price/sales ratio of 29.07, reflecting the premium investors are willing to pay for companies positioned at the center of the AI infrastructure buildout.
The other major piece of the puzzle is capital access, and the company has managed to raise approximately $9.3 billion in capital over the last eight months. This capital is being accessed through customer prepayments, convertible notes, GPU leasing, and structured finance. The company is planning to put in an additional $3.5 billion in capital expenditures to fund its expansion plans for its GPUs, servers, networking equipment, storage solutions, and facility development.
IREN Expands AI Infrastructure Capacity
The latest purchase of the GPUs is an indication of how aggressive the company is being with its entry and positioning in the AI cloud infrastructure market. The company is rapidly expanding to over 150,000 GPUs, putting it in the upper echelon of the independent AI compute providers in the market.
The company’s management also stated that procuring the hardware is essential, especially when supply is constrained in the market. The CEO of the company, Daniel Roberts, stated, Procuring hardware early is essential in today’s environment, as supply is constrained, and time-to-compute is a critical factor in execution certainty, enabling us to meet increasing demand for our AI solutions with our enterprise AI customers. This is also important, especially as major technology firms compete for scarce GPU supply.
A significant part of IREN's infrastructure growth is tied to a $9.7 billion AI cloud contract with Microsoft (MSFT), which has several construction phases referred to as Horizon 1, 2, 3, and 4. Construction on these facilities is on schedule, and the GPU expansion is part of the overall growth necessary to support the future computing needs of these projects.
The company is also growing its footprint beyond the existing locations. For instance, IREN has just announced a new location for a 1.6-gigawatt data center in Oklahoma, giving the company a total of over 4.5 gigawatts of secured grid-connected power capacity. This is significant in the AI infrastructure space, where power availability is the most significant constraint.
The company is also seeing significant traction in the AI cloud business in the state of British Columbia, with the company having already secured around $0.4 billion in annual recurring revenues and negotiations that could potentially drive this figure to over $0.5 billion.
What Do Analysts Expect for IREN Stock?
Wall Street is highly positive about the future prospects of the company with a “Moderate Buy” rating consensus. The company has a potential upside of around 104%, given that the stock is valued at around $38.56 while the mean analyst target is at $78.50. The highest analyst target is at $125, while the lowest is at $39, suggesting that the downside risk is limited for the company.
On the date of publication, Yiannis Zourmpanos had a position in: IREN . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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