IREN’s $2 Billion Convertible Note Spooks the Market Even as AI Revenue Explodes

AI infrastructure firm IREN tumbles after announcing $2B convertible note, missing Q3 revenue estimates, but secures $13B+ in major contracts with Microsoft and Nvidia.

IREN delivered a textbook case of market myopia on Monday. The AI infrastructure player posted a jaw-dropping 839% surge in AI cloud revenue, yet its stock cratered more than 9% to €47.10 after management unveiled plans for a $2 billion convertible bond. The disconnect underscores just how sensitive investors have become to dilution risk, even when the underlying business is undergoing a radical transformation.

The convertible note, due 2033, comes with a $300 million greenshoe for institutional buyers. To cushion the blow for existing shareholders, IREN is using capped-call transactions that kick in when the bonds convert into equity. A portion of the proceeds will also be used to retire older convertible notes from 2029 and 2030, reducing near-term refinancing pressure. Still, the market interpreted the capital raise as a sign that the company needs more cash than its operations can currently generate.

That impression was reinforced by the fiscal third-quarter numbers. Total revenue came in at $144.8 million, essentially flat year-on-year but well short of the $220 million analysts had expected. A net loss of $247.8 million compared with just $16.1 million a year earlier, and the per-share loss of $0.30 also missed forecasts. Yet the headline figures mask a tale of two businesses. Bitcoin mining revenue slid 21% to $111.2 million, while AI cloud services rocketed to $33.6 million from a tiny base. The loss itself is largely a non-cash impairment charge of $140.4 million on aging mining hardware that IREN is scrapping to make room for AI infrastructure. Adjusted EBITDA fell 28% to $59.5 million, dragged higher by SG&A and depreciation — the predictable cost of a capital-intensive pivot.

Despite the quarterly stumble, IREN’s balance sheet looks robust. Cash and equivalents stood at $2.2 billion on March 31, 2026, rising to $2.6 billion by the end of April. That war chest is funding roughly 150,000 graphics processing units, either already installed or on order, and the integration of two recent acquisitions: Mirantis and Nostrum Group, which bring engineering talent and European data-center capacity. The company’s development pipeline now spans about five gigawatts of total power, boosted by the purchase of Spanish firm Ingenostrum.

The bull case rests squarely on two massive contracts. A $9.7 billion, five-year deal with Microsoft covers dedicated GPU services, while a separate $3.4 billion agreement with Nvidia provides additional revenue visibility. Contracted annual recurring revenue already sits at $3.1 billion, and management expects that to reach $3.7 billion by the end of 2026. The company aims to have 480 megawatts of AI cloud capacity online by then and 1,210 megawatts by 2027, spread across North America, Europe and the Asia-Pacific region.

Analyst opinions remain sharply divided. JPMorgan recently lifted its price target to $46 but kept an “underweight” rating, citing doubts about IREN’s ability to lock in long-term hardware contracts. Bernstein, by contrast, sees a path to $100, betting that the Nvidia relationship will secure the company’s transition from pure-play bitcoin miner to diversified AI data-center operator.

Over the past twelve months, the stock is still up nearly 600%, and the week leading up to the earnings report saw a 23% gain that pushed shares to €51.91 — well above the 200-day moving average. That rally evaporated after the convertible bond announcement, and traders are now eyeing the 50-day moving average at €36.82 as the next major support level. For a company whose AI revenue is expanding at 839% and whose order book is backed by Microsoft, the current selloff may look like a buying opportunity — but only if management can convince the market that the dilution is a bridge to profitability, not a crutch.