IREN (IREN) shares surged 7.3% to $51.94 in late morning trading on Thursday, as investors weighed the company's ambitious pivot from bitcoin mining to AI cloud services against the looming threat of significant shareholder dilution. The move comes amid a broader industry scramble by hyperscalers to secure power, chips, and data center capacity.
The company plans to deploy 150,000 Nvidia GPUs by late 2026, with management projecting the expanded fleet could generate over $3.7 billion in annualized AI cloud revenue. However, AI cloud revenue remains a small fraction of the business, with just $17.3 million reported last quarter compared to $167.4 million from bitcoin mining.
A new SEC prospectus supplement filed on March 4 allows IREN to sell up to $6 billion in ordinary shares through an at-the-market program, raising concerns about dilution. The company had previously sold 66.7 million shares for roughly $1 billion under an earlier round.
Analyst opinions remain sharply divided. Seeking Alpha flagged the risk that the hefty share sale could undermine the company's hyperscale push, while Simply Wall St pointed to skepticism about the feasibility of converting crypto mining infrastructure for AI use.
IREN has locked in $9.3 billion in funding over the past eight months, including a $9.7 billion, five-year cloud services deal with Microsoft (MSFT) signed in November. The company reported $2.8 billion in cash as of January and has more than 4.5 gigawatts of power capacity on the grid, boosted by a 1.6-gigawatt addition in Oklahoma.
CEO Daniel Roberts has been clear about the company's ambitions, stating that scaling to 150,000 GPUs could position IREN among the world's top AI cloud infrastructure players. The additional chips are set to roll out in phases through the latter half of 2026, split between Mackenzie, British Columbia and Childress, Texas.
The broader market context is favorable, with hyperscalers like Amazon (AMZN), Microsoft, Alphabet (GOOGL), and Meta (META) collectively expected to spend close to $630 billion on data centers and AI chips by 2026. Applied Digital recently disclosed a $7.5 billion, 15-year lease deal with an undisclosed U.S. hyperscaler, while Hut 8 secured a $7 billion AI lease in December.
Despite the optimism, execution risks remain high. The company faces challenges in securing GPUs on schedule, locking in customer contracts, hitting construction targets, and securing grid hookups. If any of these falter, IREN's business remains anchored in bitcoin mining but saddled with the expenses of building AI infrastructure.
