Market analysis positions Iris Energy (IREN) as a 'real backdoor AI winner' in infrastructure buildout and compute-plus-power consolidation.

Nvidia holds the linchpin position in the AI market as the world's largest producer of data center GPUs. Most of the world's top AI companies rely on its chips to train their large language models, and Nvidia's proprietary software locks in those clients. Yet with a market cap of $4.7 trillion, Nvidia is already the world's largest company. For investors seeking larger percentage gains, smaller, faster-growing AI infrastructure companies may offer more promising returns.

IREN (NASDAQ: IREN) exemplifies this opportunity. The Australian company has rallied nearly 150% over the past 12 months and now carries a valuation of roughly $14 billion. Originally a renewable-energy-focused Bitcoin miner called Iris Energy, IREN rebranded in 2024 and pivoted decisively toward AI infrastructure by acquiring Nvidia H100 and H200 GPUs. Throughout 2025, the company reallocated all capital, logistics, and power infrastructure away from Bitcoin mining toward building AI and high-performance computing data centers.

The catalyst for this shift came from two transformative deals. Last November, IREN secured a five-year, $9.7 billion AI cloud contract with Microsoft. In May, it signed a $3.4 billion contract for AI cloud services with Nvidia. These mega-deals elevated IREN into the "neocloud" category, attracting interest from both retail and institutional investors, including Leopold Aschenbrenner's AI-focused Situational Awareness hedge fund. While IREN continues mining Bitcoin, the bulk of its growth now stems from AI services.

Analysts project substantial expansion from these contracts. From fiscal 2025 (ended June 2025) through fiscal 2028, IREN's revenue is expected to climb from $510 million to $6.44 billion. Adjusted EBITDA is forecasted to grow from $270 million in 2025 to $4.89 billion in 2028, reaching profitability by 2028's end.

At an enterprise value of $15.7 billion, IREN trades at roughly seven and ten times next year's projected sales and adjusted EBITDA, respectively—valuations compressed by near-term spending concerns. Over the long term, however, the company could deliver substantial gains as its AI infrastructure business scales. Additionally, IREN's Bitcoin holdings could appreciate if cryptocurrency markets stabilize.

The primary risk lies in execution of its spending plans and the sustainability of its cloud partnerships as AI infrastructure consolidates across the industry.