Iren Limited has secured a significant five-year, $9.7 billion GPU cloud agreement with Microsoft, marking a major turning point for the company as it expands into AI infrastructure. Despite shares closing down 6.8% on Friday at $62.38, Wall Street remains optimistic about Iren’s future prospects.
**Microsoft Partnership and Financial Impact**
Under the deal, Microsoft will prepay 20% of the contract value upfront, providing Iren with the necessary cash to acquire Nvidia GB300 GPUs and expand its data center capacity. The agreement is projected to deliver a 32% levered internal rate of return, highlighting its strong financial potential.
Following the announcement, Canaccord Genuity raised its price target on Iren stock from $42 to $70, maintaining a buy rating. Analysts, led by Joseph Vafi, noted that this deal could shift investor focus from Iren’s traditional mining operations towards AI infrastructure opportunities.
**GPU Supply and Data Center Expansion**
Iren will supply Microsoft with Nvidia GB300 GPUs from its Horizon data centers located in Texas. The Horizon project, estimated to cost around $3 billion, is expected to be approximately half-funded by the Microsoft contract. Although chip availability and power supply remain risks, Microsoft’s upfront payment and credit support significantly reduce uncertainty.
This deal will increase Iren’s annual revenue run rate (ARR) from $500 million to $2.5 billion once fully operational, with projections reaching $3.4 billion by the end of 2026.
In October, Iren secured multiyear contracts covering 11,000 of its 23,000 AI GPUs, generating about $225 million in revenue and featuring an average two-year payback period. Management remains on track to lease the remaining 12,000 chips by the end of the year. Additionally, the company raised $1 billion through an oversubscribed convertible notes offering.
**Sweetwater Site and Future Growth Prospects**
The convertible notes offering came with no coupon and a 42.5% conversion premium. Iren used $56.7 million of the proceeds to buy capped calls that limit dilution, pushing the effective conversion price above $120.18 per share.
Canaccord highlighted Iren’s upcoming two-gigawatt Sweetwater 1 facility, scheduled to come online in 2026, as the next major catalyst for growth. Power scarcity continues to drive demand among hyperscalers for data center capacity, making Sweetwater an attractive asset. The broker raised its Sweetwater valuation to $32 per share.
Iren also holds contracted land and power for future expansion and is in discussions to grow beyond its current 23,000 GPUs to potentially 100,000 GPUs.
**Financial Performance and Market Position**
Last quarter, Iren reported revenue of $240.3 million — a 355% jump year-over-year. The current $2.5 billion ARR utilizes approximately 350 MW of capacity, while an additional 2 GW of contracted power at Sweetwater remains unactivated.
Trading at around five times its 2026 ARR guidance, Canaccord points to Iren’s scale, access to low-cost power, and operational integration as key strengths. These factors position the company uniquely at the intersection of cryptocurrency mining and AI infrastructure markets.
With solid backing from Microsoft and promising growth prospects, Iren Limited is poised for significant expansion in the years ahead.
https://blockonomi.com/iren-stock-9-7-billion-microsoft-contract-drives-analyst-upgrade/
