Key Highlights
- Jefferies launched IREN coverage with a Buy recommendation and $79 price objective, suggesting approximately 30% growth potential from current levels near $60.50.
- Shares of IREN climbed roughly 5% during premarket hours Thursday after the analyst report was released.
- The investment firm highlighted IREN’s partnerships with Microsoft and Nvidia as key drivers for generating $3.1B in yearly recurring revenue.
- Jefferies projects IREN’s AI cloud strategy will produce superior long-term returns (~21%) compared to traditional colocation approaches (~13%).
- The company is pursuing international growth, recently purchasing Spanish AI data center firm Nostrum and revealing plans for an 800 MW facility in South Australia.
Shares of IREN Limited (IREN) stock rose approximately 5% during Thursday’s premarket session after investment bank Jefferies launched coverage with a Buy recommendation and established a $79 price objective. The equity was hovering around $60.50 prior to Thursday’s trading activity.
Jefferies analyst Jonathan Petersen spearheaded the coverage initiation, emphasizing IREN’s extensive power capacity portfolio and its strategic transition from cryptocurrency mining operations toward AI cloud infrastructure as primary catalysts for the optimistic assessment.
According to the firm’s analysis, IREN controls access to approximately 6 gigawatts of secured electrical capacity worldwide. Currently, less than 10% of this capacity is being utilized. This substantial unused capacity represents a significant growth opportunity in Jefferies’ view.
IREN’s most significant partnerships involve Microsoft and Nvidia. The Microsoft arrangement at its Childress location encompasses a five-year, $9.7 billion agreement for Nvidia GB300 GPU infrastructure. The agreement features a $1.9 billion upfront payment along with $3.65 billion in GPU financing arranged at approximately 6% interest.
The Nvidia partnership, valued at $3.4 billion for AI Cloud services, was announced subsequently. Combined, Jefferies projects these two major agreements alone have the potential to generate $3.1 billion in annual recurring revenue.
According to the firm’s calculations, the Microsoft deal’s structure enables IREN to recover its $8.8 billion capital investment during the contract period, with unlevered internal returns exceeding 20%.
AI Cloud vs. Colocation
Jefferies presented a compelling case supporting IREN’s approach of operating proprietary AI cloud infrastructure instead of merely renting data center capacity. Across a 10 to 20 year timeframe, the firm forecasts AI cloud returns of approximately 21% versus only 13% from a colocation approach.
This performance gap widens over extended periods, and Jefferies contends that controlling the real estate and data center assets provides IREN with strategic flexibility unavailable to pure leasing competitors.
Petersen characterized IREN as occupying “a unique place among AI infrastructure providers,” observing that real estate and facility ownership enables the company to accommodate diverse customer requirements ranging from powered shell configurations through complete GPU cloud deployments.
Global Expansion
IREN continues advancing its growth strategy. The organization recently disclosed the purchase of Nostrum, a Spanish AI data center developer that contributes approximately 490 megawatts of grid capacity in the European market.
Prior to that announcement, IREN revealed intentions for an 800-megawatt data center complex in South Australia, designed to address AI infrastructure demand throughout the Asia-Pacific geography.
Jefferies also observed IREN’s financial position appears robust. Following deductions for GPU and data center capital expenditures, the firm calculates IREN maintains roughly $250 million in available capital for additional initiatives. However, certain market observers suggest that figure might approach $900 million when accounting for recent fundraising activities.
Jefferies classified IREN as a direct rival to CoreWeave (CRWV) and Nebius (NBIS), both operating within the comparable vertically integrated AI infrastructure sector.
IREN stock finished Wednesday’s session trading near $60.50, making Jefferies’ $79 price objective indicative of approximately 30% appreciation from that price point.
