Wall Street has begun reacting to data center infrastructure company IREN Limited’s (IREN) new $9.7 billion deal with U.S. tech giant Microsoft (MSFT). Darren Aftahi, a five-star analyst at Roth MKM, believes the first major deal for IREN has “more legs to it” as the first of its kind.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Under the five-year contract, IREN will supply Microsoft with access to chip designer Nvidia’s (NVDA) GB300 graphics processing units (GPUs) to power the tech company’s next-generation AI cloud infrastructure.
Consequently, IREN has entered a related $5.8 billion arrangement with Dell Technologies (DELL) to purchase GPUs and other key equipment for the buildout, which is expected to be deployed through 2026. The deal will see IREN roll out the GPUs in phases across its 750-megawatt campus in Childress, Texas.
IREN’s Microsoft Deal Is the Best ‘Brand Validator’
Aftahi ranks 813 out of over 10,000 analysts on Wall Street; he boasts a 39% success rate and has an average return of more than 14%. According to the analyst, IREN’s deal with Microsoft “comes as no surprise.”
The Roth MKM analyst pointed out that IREN — previously focused on Bitcoin mining — has been shifting its business model to become a provider of next-generation cloud services tailored for AI. The Sydney-based company also continues to maintain the option and ability to convert its infrastructure, over time, to co-located or shared high-performance computing (HPC) facilities.
Aftahi, therefore, praised the deal as the best “brand validator” for IREN’s AI cloud business.
“When we look at Childress (and IREN) as a whole, we now believe that artificial intelligence cloud is taking a front seat, with the remaining 450 megawatts of Childress advancing with designs to convert the entire site to liquid-cooled GPU racks, as well as sites in British Columbia,” Aftahi explained.
In addition, the analyst argued that the income IREN earns from its AI cloud deals should enable it to recoup the costs of its data center and GPU hardware investments within the next three to four years, giving the company the option to move beyond short-term AI cloud deals to longer-term HPC colocation arrangements at the same sites.
Is IREN Stock a Strong Buy?
Based on the foregoing, Aftahi raised his price target on IREN stock by 15% from $82 per share to $94. He also maintained his Buy rating on the stock.
However, across Wall Street, the approach remains more cautious. IREN’s shares currently carry a Moderate Buy consensus rating — as TipRanks data shows — based on eight Buys, two Holds, and two Sells issued by 12 analysts over the past three months.
Moreover, the average IREN price target of $68 indicates only a marginal 0.37% upside from the current level.
