IREN Pushes Into AI Infrastructure With Nvidia and Microsoft Contracts, While a $248 Million Loss Highlights the Cost of Transition

IREN reports Q3 revenue miss but AI cloud revenue surges 94% as it pivots to AI infrastructure with $3.4B Nvidia deal and $9.7B Microsoft contract.

The Australian firm once known as a Bitcoin miner is repositioning itself as a provider of end-to-end AI infrastructure — from power procurement and data centers to GPU cloud services. This pivot has drawn two blockbuster customers in Nvidia and Microsoft, but the latest quarterly results reveal how expensive that transformation can be.

IREN reported third-fiscal-quarter revenue of $144.8 million for the period ending March, well short of the $219.3 million analysts had expected. Net losses swelled to $247.8 million, driven largely by $140.4 million in write-downs on retired Bitcoin mining equipment. The silver lining came from the company’s newer business line: revenue from AI cloud services jumped 94.2% quarter over quarter to $33.6 million, signaling that the strategy is beginning to gain traction.

The centerpiece of that shift is a five-year contract with Nvidia worth $3.4 billion. IREN will deploy air-cooled Blackwell GPU systems at its Childress, Texas, facility, offering managed cloud services rather than selling hardware. Nvidia also secured an option to buy up to 30 million IREN common shares at $70 each — a potential injection of roughly $2.1 billion tied to achieving certain buildout targets. That equity stake gives Nvidia a direct interest in IREN’s success while providing the smaller firm with a powerful endorsement.

Alongside the Nvidia deal, an existing five-year pact with Microsoft valued at $9.7 billion completes a multi-billion-dollar backlog. Together, the two contracts underpin IREN’s goal of reaching $3.7 billion in annualized recurring revenue by the end of 2026, of which approximately $3.1 billion is already secured through signed agreements.

To deliver on those promises, IREN is racing to expand its physical footprint. The Sweetwater 1 site in Texas has been fully energized at 1.4 gigawatts, with its high-voltage substation now linked to the ERCOT grid. This connection is crucial because AI data centers require reliable, schedulable power, not just chips. The company currently has 1,210 megawatts under construction for 2027 delivery, and its total secured power portfolio stands at 5 gigawatts.

The market has taken notice, but not all large investors are moving in the same direction. BlackRock boosted its IREN stake by more than 600%, adding 3.8 million shares, while Morgan Stanley cut its exposure. Analysts remain broadly bullish: the average 12-month price target hovers around $80, with a high-end estimate of $105, implying upside of roughly 20% from current levels.

The stock closed Friday at €48.90, down 2.16% on the day but up 7.39% over the past week. Year to date, shares have gained 34%. The ride has been anything but smooth — annualized 30-day volatility sits at 126.58%, and the relative strength index of 47.6 suggests a neutral near-term posture. The stock trades 26.48% below its recent peak and 31.57% above its long-term moving average, a profile typical of names that swing on news flow and execution updates.

The next operational test is Sweetwater: the site must deliver capacity on schedule to convert IREN’s ambitious contracts into revenue. Any delays could quickly punish a stock that already prices in significant future growth. For now, the combination of Nvidia’s equity option, Microsoft’s commitment, and a growing power base gives the AI narrative substance — but the heavy losses and the quarter’s revenue miss serve as a reminder that transformation comes with costs.