Iris Energy (IREN), pivoting from cryptocurrency mining to AI cloud infrastructure, faces stock-price momentum loss despite the strategic reorientation.
IREN, formerly known as Iris Energy, is an Australian company pivoting from Bitcoin mining to AI data centers. The stock dropped to $38.70 on Wednesday, down modestly from a September high of $49.60 and by 50% from its all-time peak, as investors remain cautious of neocloud companies broadly.
Despite strong underlying demand for AI infrastructure, IREN has already inked several major deals, including a $9.7 billion agreement with Microsoft and contracts with AI companies like Perplexity and Reflection AI. The company's most recent results showed the transition in progress: revenue fell from $144.8 million in the first quarter to $137.2 million in the second, while AI cloud service revenue surged from $33 million to $70.5 million and Bitcoin mining revenue declined correspondingly.
The ongoing weakness mirrors the performance of other neocloud companies like CoreWeave and Nebius, reflecting broader investor concerns about the potential bursting of the AI bubble. Ray Dalio has warned this could happen soon, pointing to elevated interest rates, with the ten-year yield trading at the highest level in over two decades.
Several structural headwinds weigh on the stock. IREN's depreciation and amortization stood at over $112 million, a significant burden against revenue of $137.2 million. The company assumes GPUs have a useful life exceeding six years, but analysts like Michael Burry argue the realistic duration is under three years, as new GPU models from Nvidia diminish the value of older chips.
Debt has become another concern. IREN's total debt jumped to over $7.4 billion from approximately $965 million in June of the previous year. The company also faces potential shareholder dilution, with outstanding shares rising to 380 million from 331 million since January.
Technically, the stock has moved below both its 50-day and 100-day moving averages, signaling bear market control. The price has formed an ascending channel resembling a bearish flag pattern, and the Relative Strength Index and MACD indicators continue falling. The most likely scenario points to further declines, with the next key support level at $28.74, the stock's low from July.