IREN's Nvidia Ties Deepen Even as Investors Punish a Bruising Earnings Reset

IREN swings to $702.6M loss as AI cloud revenue tops mining; Nvidia option and $3.4B contract signal deep ties.

The optics could hardly be more contradictory. On the same day IREN's share price absorbed a double-digit hit following a fourth-quarter report drenched in red ink, fresh details emerged of a strategic embrace with Nvidia that runs far deeper than a typical customer-supplier arrangement.

The chip giant secured an option to acquire up to 30 million IREN shares at $70 apiece as part of the recently completed Mirantis acquisition — a five-year right that, if fully exercised, would be worth as much as $2.1 billion. That equity sweetener sits alongside a five-year GPU cloud contract valued at $3.4 billion, a pairing that underscores how intertwined the two companies have become.

The market, however, was in no mood to celebrate the partnership. IREN shares traded around €30.32 on Friday, down roughly 13 percent on the day, as investors digested quarterly results that showed the cost of a deliberate, painful transition. The stock now sits about 56 percent below its 52-week high of €68.61, reached in early November.

The Price of Abandoning Bitcoin

The earnings report laid bare the financial strain of IREN's metamorphosis from crypto miner to AI infrastructure provider. Revenue for fiscal 2026 climbed 41.1 percent to $707 million, yet the company swung to a net loss of $702.6 million — a stark reversal from the $86.9 million profit posted a year earlier.

The damage was largely self-inflicted, by design. A hefty impairment charge on retired Bitcoin mining hardware — $450.4 million in non-cash writedowns, according to the company's US GAAP figures — reflects the accelerated decommissioning of equipment at multiple sites. IREN plans to wind down its legacy mining operations by the end of December 2026, converting roughly 380 megawatts of capacity to AI workloads.

The fourth quarter alone produced a net loss of $684 million, with adjusted EBITDA of $19.2 million coming in well short of the $34.9 million consensus estimate. Revenue of $137.2 million also missed Wall Street's expectations of around $157.1 million, while the adjusted loss per share of $0.41 was wider than the $0.34 analysts had penciled in.

A Business Model in Mid-Flight

Beneath the ugly headline numbers, the revenue mix tells a more encouraging story about the direction of travel. AI cloud services revenue more than doubled sequentially to $70.5 million in the fourth quarter, representing 51.4 percent of total sales and overtaking Bitcoin mining revenue of $66.7 million for the first time. For the full year, AI cloud revenue surged from $16.4 million to $128.8 million.

Management has also raised its sights on contracted revenue. IREN now targets an annualized, fully contracted revenue base of $4 billion for 2026, up from a previous target of $3.4 billion, supported by a new multi-year agreement with an unnamed "leading frontier AI lab" and the first delivered phase of its Microsoft project. Capacity for 2026 is described as largely sold out.

That ambition carries a hefty price tag. The company plans capital expenditures of $25 billion to $30 billion in fiscal 2027 to expand capacity from 480 megawatts this year to 1.2 gigawatts — an undertaking that requires financing at a scale that would have been unthinkable for a Bitcoin miner just a few years ago.

Debt-Fueled Expansion

IREN has moved quickly to secure the necessary firepower. In addition to the Nvidia-linked arrangements, the company has locked in $2.8 billion in new GPU financing facilities led by Blue Owl Capital and Pacific Investment Management Company, priced at a fixed interest rate of 9.0 percent. The facilities will cover 90 percent of capital expenditures at the Mackenzie site. This builds on a previously announced $6.5 billion GPU financing package, illustrating the extent to which the company now leans on borrowed capital to keep pace with AI demand.

The strategy carries obvious risks. Insider sales of $66.7 million over the past twelve months, with no corresponding purchases, suggest at least some executives have chosen to bank gains while the company pushes forward with heavily leveraged growth. The interest burden alone will weigh on results for years to come.

Analysts Hold the Line

Despite the market's negative reaction, several research houses remain constructive. Cantor Fitzgerald reaffirmed its "Overweight" rating with a $99 price target, implying upside of roughly 144 percent from Friday's opening level. H.C. Wainwright rates the stock a buy at $90, while Citizens JMP has set a target of $80.

The bull case rests on the conviction that the transition, however messy in the near term, positions IREN as a meaningful player in AI infrastructure at a time when compute capacity is scarce. The Nvidia option, in particular, signals that one of the most important companies in the technology ecosystem sees strategic value in a deeper alignment.

The bear case is equally straightforward: a company burning through cash, carrying expensive debt, and executing a pivot that has already erased more than half of its market value from the November peak. Over the past twelve months, the stock is still up 63 percent — a reminder of just how volatile the re-rating has been.

For now, the market is weighing a simple question: whether IREN's aggressive, debt-financed transformation will ultimately be rewarded, or whether the bill for this ambitious pivot will keep growing faster than the AI revenue that is supposed to justify it.